Canada Not reporting Offshore Accounts - Jerome Schnieder - david ingram expert US CANADA cross border non-resident income tax help and preparation by five tax experts with years of experience with , Panama, American and Mexican income tax

[Canadian Income Tax Help - CEN-TAPEDE]

Dear Mr. Ingram

A short question.

Is it true that ownership of foreign annuities doesn't have to be reported to the government (as ownership of foreign bank accounts must be) . . .even if they have investment income, dividends, etc inside of them?

Thank you sir!

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david ingram replies:

Not that I know of in either the US or Canada.

Various people tried to come up with such an animal but so far as i know, they all lost.

Many went to jail as Jerome Schneider did. His specialty was setting Americans up with Offshore entities.  I am old that over 1,000 of his clients were fined a minimum of $10,000.  Unfortunately, no one appealed so we only have his conviction on rcord.  However, he turned 1072 clients over to the IRS and Department of the Treasury in his plea bargain.

read on!

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QUESTION:

I am thinking of opening a brokerage account to trade commodities on the US market, however I am considering establishing a company or trust in a "tax-haven" country such as the British Virgin Islands to open the trading account.  I remember hearing Mr. Ingram on the radio a few years ago and he gave some cautionary advice on this subject.  So my question is as follows.  What are the benefits, negatives, and risks associated with opening a company in a tax-haven country and what are the legal implications as far as Canadian tax is concerned.  Any other related comments would be most welcomed.  Thank you very much.

--------------------------------

david ingram replies:

This question was asked by a Canadian resident but i am going to answer it for a US or Australian or New Zealand or Great Britain and another 150 countries as well.

When you are a resident of a country with an income tax act, you are taxable on your world income.

A lot of Canadians living in Mexico are not reporting their offshore accounts and are clearly risking their freedom and liberty by evading Mexican Income Taxes.

Costa Rica, Panama, the Bahamas, Grand Caymans, Dubai, etc. do not care about your offshore income.

BUT!

If you live in Canada or the US or Mexico, etc.you are taxable on any income earned anywhere in the world.

Therefore, a BVI account is perfectly legal as long as you report your capital gains, interest and dividends from the accounts.  In addition, if the accounts total over $10,000 US, you have to file US forms TDF 90-22.1 and maybe 3520 to report these accounts and the internal earnings.  Failure to file the US form and check off 'yes' to question 7a on schedule B of your 1040 can result in a fine from $10,000 to $500,000 PLUS five years for US residents or US Citizens no matter where they live.

Canadians have to file form T1135 if the total investments out of Canada are over $100,000.  the minimum penalty is $100 for failure to file and the maximum is $2,500 (plus interest) when the form is 100days late at $25.00 a day.

The worst part about Offshore investing is that people get mixed up with sharks and the shark disappears with their money OR the shark gets arrested and turns his or her clients over tot he IRS or the CRA to get out of jail sooner as happened with Vancouver's own Jerome Schneider.

Vancouver's Jerome Schneider turned over 1000 of his clients over to the IRS for penalty when he plea bargained himself from a 99 year to an 8 month jail sentence plus a $100,000 fine.

Over the years i have likely run into over 100 people who have set up accounts in the BVI, Jamaica, Montserrat, Grand Caymans, Vanuatu, etc and never seen their money again.  The sharks - guys like Scott Brown or Hoffman and maybe Nike Masee just ran off with their money because they had set up the secret accounts.

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I am regularly asked - How do i pick a tax preparer?  The IRS has some helpful hints below.

Beware of all of those claims some make.  Better safe than sorry.

-

News release

Creative accounting sends tax preparer to jail for fraud

Vancouver, British Columbia, December 13, 2007.Stanley Nisbet was sentenced today in Robson Square Provincial Court after pleading guilty to 17 counts of income tax and goods and services tax (GST) fraud, and 6 counts of theft and 4 counts of fraud under the Criminal Code. Nisbet was sentenced to 4 years in jail on the tax related and fraud counts, and 18-months in jail, to be served concurrently, on the 6 theft counts. In addition he was fined $254,910. The fine represents 100% of the federal tax evaded and GST he fraudulently obtained. In addition to the fine, Nisbet still has to pay the full amount of tax owing, plus interest, and any other penalties the Canada Revenue Agency (CRA) assesses.

This is Nisbet's second conviction for tax-related fraud. He pleaded guilty on August 5, 2004, and was fined $7,500 for filing a false tax return on behalf of a client.

A CRA investigation revealed that Nisbet used a variety of schemes to defraud the CRA and his clients, including:

  a.. claiming GST refunds that his clients were not entitled to;

  b.. creating fictitious business or rental losses to offset employment income to generate a refund;

  c.. claiming T4 income, including tax deductions from that income, to generate refunds for clients who did not owe tax;

  d.. advising clients that they owed CRA money but should pay him directly- Nesbit would then keep the money and claim a refund from the CRA on behalf of his client;

  e.. simply stealing refunds that clients were genuinely entitled to.

What each of Nisbet's schemes had in common was that he asked the CRA to deposit all of his clients' refunds directly into his own bank account.

>From 1995 to 2004, Nisbet operated a tax preparation business in Delta, B.C., called Acura Financial Management and claimed to have multiple offices and a bachelor's degree in accounting.  In fact his "degree" was a certificate that he had purchased from the Virgin Islands and Delta was his only office. Soon after his first conviction, he closed his business and moved to Powell River.

CRA conducted a search of Nisbet's Powell River residence as part of the investigation of his income tax and GST fraud. Nisbet then moved to the United Kingdom, but was extradited back to Canada on August 3, 2007. He has remained in custody since his extradition.

"CRA pursues tax evaders to maintain public confidence in the integrity of the tax system," said William V. Baker, Commissioner of the Canada Revenue Agency. "Canadians have to trust that our self-assessment system is working and that it is fair."

When individuals or corporations are convicted of tax evasion and GST fraud, they have to pay the full amount of tax owing, GST fraudulently obtained, plus interest, and any penalties the CRA assesses.

The information in this news release was obtained from court records.

Further information on convictions can also be found in the Media room on the CRA Web site at www.cra.gc.ca/convictions.

Back to menu

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That was just one of the many convicted in Canada.

The following is a year old IRS bulletin dealing  with US tax preparers - .

      Tax Return Preparer Fraud

            FS-2007-12, January 2007

            Return preparer fraud generally involves the preparation and filing of false income tax returns by preparers who claim inflated personal or business expenses, false deductions, unallowable credits or excessive exemptions on returns prepared for their clients. This includes inflated requests for the special one-time refund of the long-distance telephone tax. Preparers may also manipulate income figures to obtain tax credits, such as the Earned Income Tax Credit, fraudulently.

            In some situations, the client (taxpayer) may not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns. However, when the IRS detects the false return, the taxpayer - not the return preparer - must pay the additional taxes and interest and may be subject to penalties.

            The IRS Return Preparer Program focuses on enhancing compliance in the return-preparer community by investigating and referring criminal activity by return preparers to the Department of Justice for prosecution and/or asserting appropriate civil penalties against unscrupulous return preparers.

            While most preparers provide excellent service to their clients, the IRS urges taxpayers to be very careful when choosing a tax preparer. Taxpayers should be as careful as they would be in choosing a doctor or a lawyer. It is important to know that even if someone else prepares a tax return, the taxpayer is ultimately responsible for all the information on the tax return.

            Helpful Hints When Choosing a Return Preparer

              a.. Be careful with tax preparers who claim they can obtain larger refunds than other preparers.

              b.. Avoid preparers who base their fee on a percentage of the amount of the refund.

              c.. Stay away from preparers who claim that many, if not most, phone customers can get hundreds of dollars or more back under the telephone tax refund program.

              d.. Use a reputable tax professional who signs your tax return and provides you with a copy for your records.

              e.. Consider whether the individual or firm will be around to answer questions about the preparation of your tax return months, or even years, after the return has been filed.

              f.. Review your return before you sign it and ask questions on entries you don't understand.

              g.. No matter who prepares your tax return, you (the taxpayer) are ultimately responsible for all of the information on your tax return. Therefore, never sign a blank tax form.

              h.. Find out the person's credentials. Only attorneys, CPAs and enrolled agents can represent taxpayers before the IRS in all matters including audits, collection and appeals. Other return preparers may only represent taxpayers for audits of returns they actually prepared.

              i.. Find out if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

              j.. Ask questions. Do you know anyone who has used the tax professional? Were they satisfied with the service they received?

            Reputable preparers will ask to see your receipts and will ask you multiple questions to determine your qualifications for expenses, deductions and other items. By doing so, they are trying to help you avoid penalties, interest or additional taxes that could result from an IRS examination.

            Further, tax evasion is a risky crime, a felony, punishable by five years imprisonment and a $250,000 fine.

            Criminal Investigation Statistical Information on Return Preparer Fraud

                 FY 2006

                 FY 2005

                 FY 2004

                  Investigations Initiated

                 197

                 248

                 206

                  Prosecution Recommendations

                 153

                 140

                 167

                  Indictments/Informations

                 135

                 119

                 121

                  Sentenced

                 109

                 118

                 90

                  Incarceration Rate*

                 89.0%

                 85.6%

                 84.4%

                  Avg. Months to Serve

                 18

                 18

                 19

            *Incarceration may include prison time, home confinement, electronic monitoring or a combination.

            Criminal and Civil Legal Actions

            Some return preparers have been convicted of, or have pleaded guilty to, felony charges.

            Additionally, the courts have issued 175 permanent injunctions against abusive tax scheme promoters and abusive return preparers since 2003. The following case summaries are excerpts from public record documents on file in the court records in the judicial district in which the legal actions were filed.

            California Tax Preparers Sentenced to Prison Terms for Operating Tax Fraud Schemes

            On Oct. 6, 2006, in San Diego, Calif., Susan E. O'Brien, a professional tax preparer who operated "The O'Brien Group," was sentenced to ten years and five months in prison and ordered to pay $113,179 in restitution. She was convicted on May 2, 2006, for tax evasion, defrauding the United States and aiding and assisting in the filing of fraudulent tax returns. Co-defendants Robert Richard Evans and William Dean Cook were also sentenced to prison terms of 78 and 24 months, respectively. In July 2003, O'Brien, Evans, Cook and five others were charged in a 78 count indictment with various tax crimes related to tax years 1996-2002. According to the indictment and trial evidence, O'Brien prepared numerous income tax returns that claimed false business deductions and Evans promoted, sold and managed domestic trusts used by clients to hide their income and assets from the IRS. O'Brien also was convicted of evading the payment of tax on her own income. The tax evasion scheme resulted in a tax loss to the United States  of more than $1 million.

            Two Sentenced for Preparing False Tax Returns

            On Sept. 20, 2006, in Monroe, La., Eddie Ferrand and William Kennedy were sentenced for aiding and assisting in the preparation of false income tax returns and conspiracy. Ferrand was sentenced to 60 months in prison to be followed by three years supervised release. Ferrand was also ordered to pay $255,890 in restitution to the IRS and a $900 assessment. Kennedy was sentenced to 27 months in prison to be followed by three years supervised release. Kennedy was also ordered to pay $39,020 in restitution to the IRS and an $800 assessment. According to the indictment, Ferrand, as the owner and operator of Mr. Ed's Tax Service, hired, trained and supervised tax preparers employed at Mr. Ed's, including co-defendant Kennedy. Ferrand, Kennedy and other co-defendants prepared income tax returns and amended prior year returns by inflating Schedule A deductions and creating false Schedule C businesses in order to increase taxpayer's refund. The defendants prepared more than three thousand returns expanding over 26 states and generating refunds in excess of $6 million.

            Minnesota Tax Preparer Sentenced for Filing False Tax Returns

            On March 23, 2006, in Minneapolis, Minn., Richard Reiss was sentenced to 41 months in prison for aiding and assisting in the preparation of 84 false tax returns. Reiss was also ordered to pay a $7,500 criminal fine and $198,958 in back taxes. Reiss prepared tax returns for more than 30 clients and claimed fraudulent and false deductions such as unreimbursed employee business expenses, mileage expenses, meals and entertainment, charitable contributions, medical expenses and tax preparation fees, and business losses resulting from business expenses that were fabricated or inflated. In total, he overstated expenses and deductions for numerous clients by more than $1 million, which resulted in tax losses of about $198,000.

            Tax Preparer Who Used Bogus Business Losses to Wipe Out Clients' Income Taxes Sentenced to 11 Years in Prison

            On Feb. 21, 2006, in Los Angeles, Calif., James Earl Wynn was sentenced to 11 years in federal prison following his April 22, 2005 conviction of 24 counts of aiding and advising in the preparation of false income tax returns. Evidence presented in court showed that Wynn solicited his clients by telling them that he operated a number of businesses in which they could invest. Wynn told his clients that if the businesses turned a loss, the clients could claim the loss on their tax return. As part of this arrangement, Wynn offered to prepare the clients' tax returns charging his clients a percentage of their tax refunds in addition to a return preparation fee. Wynn did not tell his clients that many of the businesses listed on their tax returns did not exist at all. None of the businesses listed on their tax returns as part of the tax fraud scheme ever existed as a partnership, ever filed a partnership tax return or ever sustained the losses claimed on the taxpayers' returns. Wynn caused more than 2,000 tax returns to be filed with the IRS claiming more than $75 million in false partnership losses. The tax loss to the government exceeded $10 million. On July 18, 2005, Linda M. Hall, who once worked for Wynn, was sentenced to 70 months imprisonment and was ordered to pay restitution of $6,339,023.

            Rockford Tax Preparer Sentenced to 56 Months in Federal Prison for Preparing False Tax Returns

            On Feb. 13, 2006, in Rockford, Ill., John H. Bell was sentenced to 56 months in prison, followed by one year supervised release, for preparing false federal income tax returns for others and for filing a false federal income tax return for himself. According to the indictment, Bell, the owner of Bell's Income Tax Service and of Real Estate Investors (REI) #2462, Inc., prepared false income tax returns for others. In order to support the returns, Bell attached W-2s to the returns that falsely stated the amounts of income the taxpayers received from REI and falsely stated the REI had withheld federal income tax from the taxpayers when, in fact, no such taxes had been withheld by Bell or his corporation. The indictment also charged that Bell filed an income tax return for himself that falsely stated that $8,360 in federal income tax had been withheld from him, when no federal income tax had been withheld by REI. As a result of his own false return, Bell wrongfully attempted to obtain a refund of $8,701.

            Former City of Houston Employee Sentenced to Prison

            On Jan. 27, 2006, in Houston, Tex., Jerome Harris was sentenced to 57 months in prison followed by one year supervised release. The judge further ordered that, effective immediately, Harris be prohibited from preparing tax returns or assisting tax payers in audits. Harris was convicted of 21 counts of willfully preparing fraudulent income tax returns for his clients in September 2005. Harris, a full time employee for the City of Houston, also owned and operated Jay's Bookkeeping and Tax Service, located at his residence. It was found that Harris had prepared hundreds of false tax returns for the 1995 through 2000 tax years, resulting in claims for fraudulent tax refunds by his clients totaling almost $1.3 million.

            Michigan Man Sentenced For Preparing Tax Returns in Violation of Court Order

            On Feb. 16, 2006, in Grand Rapids, Mich., Robert L. Mosher, of Cedar Springs, Mich., was sentenced to 105 days in prison for contempt of court after violating injunctions that barred him from preparing tax returns for customers. Two injunctions were obtained after the Justice Department sued Mosher in 2003 for promoting a tax scheme involving sham trusts and preparing fraudulent returns understating customers' tax liabilities. Mosher continued to prepare income tax returns after these orders were entered.

            Federal Court Permanently Shuts Down Louisiana Tax Preparer

            On April 18, 2006, Eddie Ferrand of Monroe, La., and two of his employees, Glenda Faye Elliott of Monroe, La., and William Nathaniel Kennedy of Rayville, La., were permanently barred from preparing tax returns. The court found that Ferrand, Elliott and Kennedy regularly understated customers' tax liabilities, by claiming false dependents, reporting fictitious business expenses and deductions and inflating other deductions.

            Federal Judge Stops Tax Refund Fraud by Two Florida Tax Return Preparers

            On Aug. 8, 2006, a federal court permanently barred Jean-Marie Boucicaut and Marie Thelemarque of Orlando, Fla., and Boucicaut's company, Tax Review Corporation, from preparing federal tax returns for others. The court found that the defendants filed amended income tax returns for persons without their authorization and directed the IRS to send the requested refund checks to them.

            Federal Court Bars Louisiana Tax Preparers from Claiming Inflated Deductions on Income Tax Returns

            On Oct. 5, 2006, in New Orleans, La., Rodney G. Bourg and Cynthia M. Bourg of Houma, La., were permanently barred from preparing federal income tax returns claiming inflated deductions or asserting unrealistic positions. The court found the Bourgs prepared federal income tax returns with improper per diem expense deductions for customers who worked as mariners, fishermen, merchant seamen and ferry workers.

            Where Do You Report Suspected Tax Fraud Activity?

            If you suspect tax fraud or know of an abusive return preparer, report this activity using IRS Form 3949-A, Information Referral. You can download Form 3949-A from this Web site or call 1-800-829-3676 to order by mail. Send the completed form, or a letter detailing the alleged fraudulent activity, to Internal Revenue Service, Fresno, CA 93888. Please include specific information about who you are reporting, the activity you are reporting and how you became aware of it, when the alleged violation took place, the amount of money involved and any other information that might be helpful to an investigation. Although you are not required to identify yourself, it is helpful to do so. Your identity can be kept confidential. You may also be entitled to a reward.

            Related Items:

              a.. Form 3949-A, Information Referral

              b.. Compliance & Enforcement

              c.. Tax Scams/Consumer Alerts

              d.. Standards of Practice for Tax Professionals

Jerome Schneider's story can be seen here

I have a question for you.

If the US taxes your worldly income, how does the US know about it if you don't report it?

Do Revenue Canada (insert other revenue agency name/country) and the IRS in the States freely share this information?  Do they actually match their tape registries of full names SIN's and SSN's?  I have a hard time beliving that a US Citizen living as a permanent resident and working in France is claiming their income or that the US would possibly know about it.

How in the world would the IRS possibly know if one of their ex-pat's is earning income in another country?

This just seems pretty hard to believe as I know many ex-pats in Canada that have worked very high paying jobs/careers and never have looked back to the US let alone pay taxes or report income back to the US on their hard earned Canadian income!

Thanks,

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david ingram replies:

I likely know of 100 x's more US citizens living in Canada without reporting than you do.  Up to this moment, i have never taken advantage of US form 211 which allows someone to report a US citizen and claim a reward of up to 30%  OF THE TAX COLLECTED.   However, take a look at the form.  I have an old acquaintance who makes his living turning in Americans that he meets on golf courses, at Board of Trade Luncheons and other places that wealthier Americans can be found.  (For instance, I ran into him at the Bill Clinton Speech at the Centre For The performing Arts in Vancouver on Nov 1, 2007.  If you were watching the National News that night, you may have seen Bill getting into his car with one of my US Canadian Friendship flags in his hand.  The black belly unrolling the flag was me.)

You can see the APPLICATION FOR REWARD FOR ORIGINAL INFORMATION form 211 at:  http://www.irs.gov/pub/irs-pdf/f211.pdf

You ask if the two governments exchange information.  the answer is a clear and resounding 'YES'! Canada and the US have had a pro-active mutual exchange agreement since Jan 1, 1996.

In other words, the IRS does provide the CRA with computer tapes of 1042S payments made to persons with Canadian addresses and the CRA provides the US with copies of information for US recipients of NR4 forms.

You mention France which I find delightful.  My very first 'big' case involved a fellow with the initials ML.  He was caught by the US embassy in PARIS, FRANCE.  Tax bill $218.000 and by the time he was finished, he had lost his house, wife and car (no particular order there but I think the Porsche hurt the most).

In my opinion there is 100 x's more chance being caught in France that in Canada because in France, An American in trouble has to go to the US Embassy for help with a lost passport, etc., and in Canada, 98% (or so) of Americans in Canada live within 150 miles of the US border and just go south to deal with a problem.  Also, there are over 500,000 Americans in Canada and any single individual gets lost in the masses.

However, an American with a $100,000 RRSP who does not file is automatically liable to:

1.    A minimum fine for failure to file form TDF 90-22.1 of $10,000 with a maximum of $500,000 plus up to five years in jail

       (the record in my office was a 105 year old lady with a $10,000 fine). (This form is filed with the Dept of the Treasury)

2.   A fine of 35% of the amount in the RRSP PLUS 5% per year for every year not reported for failure to file form 8891 with the IRS.

Form TDF 90-22.1 must be filed for each and every foreign account when the combined total of all foreign accounts exceeds $10,000 US.

Over 1,000 US citizens are in the process of being fined or censured on this item alone because of their dealings with a Vancouver Consultant named Jerome Schneider.  Jerome Schneider was arrested on holiday in San Francisco.  As part of his plea bargain for a $100,000 fine and six months in jail, he agreed to turn over his 1,072 clients to the IRS and Treasury.

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The following contains names of OVER 100  tax advisors and attorneys AND THEIR CLIENTS who have been jailed and is one of my older answers with a link to more Jerome Schneider and offshore information.  It starts with American Advisors and ends way down there with brief mentions of Canadians Hofman, Masee, Brown and Schneider.  I also have to say that I have met 20 to 30 of these promoters over the years.  At one time I had offices in 30 states and attended many seminars on how to avoid tax.  I do not know of a single one of them that worked.  Jerome Schneider had a lot of my paperwork in the materials he handed out.  He even handed out exact copies with the same spelling or other identifying error, some of which are put in intentionally for copyright purposes.

Do NOT stop here.  You asked and I answered.  Read about just how efficient the CRA and IRS are.  The CRA extradited Hofman from Australia and the IRS extradited a fellow from Madagascar.  It is very difficult to forever remain somewhere with no extradition.

david ingram

[Income Tax Help - CEN-TAPEDE] taxation, and secrecy - Jerome Schneider - Hoffman, Brown, Masee - a whole bunch of Americans and Canadians sentenced to jail for tax avoidance schemes. - international non-resident cross border income tax help assistance expert preparation & immigrant

centapede at lists.centa.com centapede at lists.centa.com

Sun Mar 5 15:15:46 PST 2006

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QUESTION:

I am concerned about secrecy in regards to a very legitimate business being

conducted on an international level. Mainly the safety of those employed in

what would be a very profitable endeavour. By forming an offshore llc, say

in Nevis would this secrecy be maintained.

Secondly as an American citizen I have no problems with the payment of

taxes. But I remember working as a merchant marine officer, and almost

fainting when looking at how I was Taxes for what I call blood money

earnings. I put in a lot of time, hours, physical effort, and mental effort

to be taxed such as I was. It left a bitter taste in my mouth regarding

taxes. I called it legal robbery. As I said I don't really mind reasonable

taxes, but I' afraid that the situation in our society dictates that my

earnings will somehow be shanghaied. Can I find some relief of heavy American

taxes through a foreign LLC.

Thank you very much for your time, and consideration Looking forward to

hearing from you as time permits

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david ingram replies:

Taxes are all in the eyes of the beholder.

I had a fellow from India yesterday.  He was so happy to be here that he

paid significantly more US taxes than he had to for the benefit of being a

legal resident of Canada while working in the United States.

It wasn't his expression but it reminded me of another client who told me

that the best life was to have:

*	an Indian Wife

*	Chinese food

*	A British Home and

*	an American salary.

I assure you that there is no way that you can go offshore legally as a US

citizen and exempt all of your income as a ship's officer unless you marry

someone in a tax free zone such as Panama or Costa Rica, father some

children, and return to that home whenever you get a leave.  i.e. you

"really" do live there. Establishing a bone fide residence in another country

would allow you to exempt up to $80,000 US from US tax and as long as you

were genuinely living in that jurisdiction, you would only be taxable by the

US on amounts over $80,000 US. See form 2555 as part of your US 1040 Income

Tax Package - www.irs.gov forms will let you see it.

Three years ago a fellow named Jerome Schneider set some 1,070 US citizens

up with offshore corporations over a 12 year period.  Jerome was charged and

convicted and plea bargained a possible 20 years in jail down to less than a

year by turning over the accountants and lawyers who had helped him and over

1070 clients to the IRS - you can read more from an old Q & A as follows:

--------------------------------------

I attended a seminar a couple of nights ago which dealt with a Corporation

Sole as a method of avoiding Income tax - Is this a good deal. Will it work?

It was going to be set up in New Mexico because they have some old Spanish

Law which makes it work in New Mexico.

=======================

david ingram replies:

Forget it - there is no such thing as a corporation sole making your tax

liability go down unless you are a legitimate religion.  You can read more

specifically about Corporation Sole scams at the IRS site at:

http://www.irs.gov/newsroom/article/0,,id=121566,00.html

Stay away from any offshore schemes or set-ups.  I guarantee that the IRS

and CRA have covered just about everything and are prosecuting people from

Miami to Alaska, from Los Angeles to St John's Newfoundland.  The ones I

have shown are all American but there have been an amazing number in Canada

in the last two years as well.

If you go to

http://www.irs.gov/compliance/enforcement/article/0,,id

You will get the following.

You will notice that a lot of accountants and lawyers have gone to jail for

the false advice and work they have done.  Vancouver's own Jerome Schneider

is mentioned twice.  He pled guilty and is already out of jail but he is

cooperating fully with the IRS in helping them track down and prosecute over

1,000 of his clients and the attorneys and accountants who assisted him.  A

lot of the paperwork he handed out at his seminars was taken from my stuff

complete with the same printing errors.

You can read more specifically about Schneider at:

http://www.quatloos.com/schneider_witmeyer_guilty.htm

FY2005 Examples of Abusive Tax Scheme Investigations

The following examples of abusive tax schemes and fraud investigations are

excerpts from public record documents on file in the courts in the judicial

district in which the cases were prosecuted.

Two Reno-Area Accountants Plead Guilty to Tax Crimes in Connection With

Client's Use of Abusive Offshore Scheme

On September 29, 2005, in Las Vegas, NV, Roger Steele, owner of Steele

Accountancy, Inc., pleaded guilty in connection with the advice and

assistance he gave to a client, Dale Brown, regarding Brown's 1998

individual income tax return and the 1998 income tax return of Brown's

domestic corporation.  Kimberly Steele pleaded guilty in connection with her

obstructive conduct while representing Brown during the course of the IRS's

1999 civil audit.  Brown, an author, previously pleaded guilty in April 2004

to filing a false 1998 corporate tax return on which he falsely claimed more

than $450,000 in bogus business expenses as a result of his participation in

the offshore scheme promoted by Roger Steele.   According to documents filed

with the court, in 1998 and 1999, Roger Steele assisted Brown in forming two

offshore corporations.  He advised Brown to transfer monies from his

domestic corporation to the offshore corporations and to record bogus

expenses on the domestic corporation's records for services that were never

performed or provided by the offshore corporations.  Roger Steele also

advised Brown that he could bring the monies transferred to the offshore

corporations back into the country disguised as loans or by using a credit

card issued by an offshore bank.  Steele admitted that as part of the

scheme, he knowingly prepared two false tax returns for Brown: a false 1998

income tax return for Brown's domestic corporation that included fraudulent

business deductions of more than $450,000, and a false 1998 individual

income tax return for Brown that understated Brown's income tax liability by

approximately $223,000.  Kimberly Steele admitted that during the IRS's 1999

audit, she assisted Brown in presenting to the IRS auditor a false

explanation about Brown's use of an offshore credit card. To support the

fictitious explanation, she knowingly signed and presented to the IRS

auditor a false affidavit.

$8 Million Foreign Investment Nets Prison Terms for Central Coast

Father-and-Son Team

On September 27, 2005, in Los Angeles, CA, James Carroll Sexton was

sentenced yesterday to 88 months in federal prison. His son, James Carroll

Sexton Jr. was sentenced yesterday to 21 months in prison.  The Sextons each

pleaded guilty on March 10, 2005, Sexton Jr. pleaded guilty to four counts

of mail fraud and a conspiracy to launder money.  The elder Sexton pleaded

guilty to 11 counts of mail fraud, two counts of wire fraud, four counts of

money laundering, and one count of conspiracy to money launder.   The elder

Sexton posed as an attorney and told victims he would establish a "bank

within a bank," or a trust account, at banks in Liechtenstein, a country

near Switzerland with strict bank secrecy laws. Victims testified that they

were told their money would be safe, secure and held under their sole

control.  Bank records and witnesses showed that between May 1998 and

February 1999 victims transferred more than $8 million to the accounts

ostensibly established on their behalf by Sexton. In reality, Sexton was the

sole owner and controller of the accounts. When foreign bankers began to

question Sexton about the true owners of the funds, he misrepresented the

source of funds and, with the assistance of Sexton Jr., withdrew the

victims' funds and moved the money through various other foreign bank

accounts under fictitious names and nominees in an effort to conceal and

disguise ownership. Liechtenstein law enforcement authorities provided

extensive and prompt assistance to United States authorities and returned

more than $4 million of the fraud proceeds to the U.S.

Two CPA's Sentenced in $120 Million International Tax Shelter Case

On September 16, 2005, in Seattle, WA, two Anderson's Ark & Associates (AAA)

accountants were sentenced for aiding and assisting in the preparation and

filing of fraudulent income tax returns. Tara LaGrand, of Naples, FL, was

sentenced to 24 months in prison, to be followed by one year of supervised

release. Lynden Bridges, of Wheat Ridge, CO, was sentenced to 18 months in

prison, to be followed by one year of supervised release.   LeGrand and

Bridges, each a Certified Public Accountant, were part of AAA, an

organization through which fraudulent tax shelters and investment scams were

promoted and sold. From 1996 through 2001, AAA had approximately 1,500

clients, nearly 300 of whom reported over $120 million in fraudulent income

tax deductions.  In their plea agreements, they admitted that they each

assisted AAA clients by preparing and filing the partnership agreements,

promissory notes, and income tax returns required to implement the "Look

Back" program-one of two fraudulent schemes promoted by the AAA

organization.

Indictments also have been returned against 15 AAA clients nationwide,

several of whom have pleaded guilty. Most recently, on September 13, 2005, a

jury in Milwaukee, Wisconsin, convicted one AAA client, Glen J. Murphy, of

seven counts of filing false tax returns and three counts of willfully

failing to file income tax returns.

Five Defendants Convicted of Tax Crimes in Connection With Promotion of

Abusive Trust Scheme

On September 8, 2005, in Phoenix, AZ, five persons associated with

Innovative Financial Consultants (IFC) were convicted of tax crimes in

connection with the promotion of a tax evasion scheme utilizing abusive

trusts called "pure trust organizations.  IFC advanced its scheme through

several avenues, including domestic and offshore seminars; a promotional

website; and an interactive telephone conference line.  As a result of the

prosecution, the following individuals were convicted:

1.	Dennis Poseley, a former resident of Phoenix, Arizona and co-founder of IFC

on charges of conspiracy to defraud the government and willful failure to

file tax returns;

2.	Patricia Ensign, a former resident of Phoenix, Arizona and co-founder of IFC

on charges of willful failure to file tax returns;

3.	David Trepas, a former resident of Scottsdale, Arizona and consultant for

IFC on charges of conspiracy to defraud the government and willful failure to

file tax returns;

Rachel McElhinney, a resident of Scottsdale, Arizona and consultant for IFC

on charges of willful failure to file tax returns;

Keith Priest, a former resident of Tempe, Arizona and a "trustee" for IFC on

charges of willful failure to file tax returns.

According to evidence the government presented at trial, from 1996 through

early 2003 the defendants received $4.7 million dollars in fees from their

sale of 2,000 "pure trusts," falsely claiming that their customers could

lawfully avoid income taxes by placing their income and assets into either

an "onshore" or "offshore" trust package.  The evidence revealed that the

defendants charged IFC customers approximately $10,500 for the offshore

trust package and approximately $4,154 for the onshore trust package.  Trial

evidence showed that IFC was a prominent vendor with the Institute of Global

Prosperity (IGP).  At offshore seminars hosted by IGP, defendant Dennis

Poseley promoted IFC's trust schemes to thousands of people.

Husband and Wife Sentenced for Tax Evasion Schemes

On August 31, 2005, in Honolulu, HI, Royal Lamarr Hardy was sentenced to

156-months in prison, followed by 36 months supervised release, ordered to

pay a fine in the amount of $59,267.88, costs of prosecution in the amount

of $59,267.88, and $197,555 in restitution to Internal Revenue Service for

selling tax evasion schemes and failing to file his own income tax returns.

Hardy's wife and co-defendant, Ursula Supent, was also sentenced to 60

months in prison, followed by 36 months of supervised release, and

restitution of $197,555. Two other co-defendants, Michael L. Kailing, a

self-styled tax accountant, and Fred M. Ortiz, a tax-return preparer, were

each sentenced yesterday to 36 months confinement and three years of

supervised release.  On May 13, 2005, a federal jury convicted Hardy and his

co-defendants of conspiring to defraud the United States by selling various

tax-evasion schemes over several years for the purpose of impeding the

functions of the Internal Revenue Service. Hardy and Supent were each

convicted of a second conspiracy to defraud the United States with respect

to their own income taxes. Hardy was also convicted of three counts of

willfully failing to file his own income tax returns for 1995, 1996, and

2001.  Hardy and his co-defendants were convicted of promoting what they

called the Reliance Defense from 1985 to 2002, which consisted of books and

binders filled with materials purporting to show a studied conclusion that

the federal income tax laws were voluntary. By "voluntary," the defendants

meant that the laws imposed no legal obligation to file a return or pay a

tax. The defendants marketed these materials throughout the United States

under the business names The Research Foundation and-earlier-The

Cornerstones of Freedom. In addition, Hardy's organization promoted the use

of trusts and bankruptcy proceedings to evade the collection of income

taxes. Senior U.S. District Court Judge Edward Rafeedie found that these

schemes cost the United States treasury more than $8,600,000.

Attorney Sentenced for Using Aegis Offshore Trust Program to Evade Taxes

On August 11, 2005, in Houston, TX, James S. Quay was sentenced to 15 months

in prison to be followed by one year supervised release.   Quay was also

ordered to pay a fine of $4,000 and to cooperate with the IRS to determine

the amount of taxes he evaded which, according to his plea agreement, is

believed to be approximately $61,880.   In his plea agreement, Quay admitted

to diverting $221,000 in income from his personal tax return to an offshore

company via intervening transfers to intermediary domestic and foreign

trusts under a foreign abusive tax shelter program called Aegis.

Tulsa Man Sentenced in Pennsylvania Tax Case

On July 19, 2005, in Philadelphia, PA, Robert Singleton was sentenced to 60

months in prison and ordered to pay $2.78 million in restitution after

pleading guilty to a one count Indictment charging him with conspiracy to

defraud the United States.  Singleton, through his company, The Worthington

Group, established domestic and foreign trusts in order to transfer clients'

money to off-shore accounts. Singleton conspired with William Perkins, a tax

return preparer from St. George, Utah, to file false income tax returns on

behalf of their clients in connection with the abusive, off-shore trust

scheme. The IRS has calculated the total tax loss stemming from Singleton's

off-shore scheme at approximately $3.1 million.

Tax Preparer Sentenced on Conspiracy in Trust Scheme

On July 1, 2005, in Phoenix, AZ, James D. Sherriffs was sentenced to 12

months and a day, ordered to pay restitution in the amount of $482,252.68

and was given a four year restriction against preparing tax returns and

doing bookkeeping services.  According to the plea proceedings, Sherriffs

agreed to participate through PROTEC Services Trust in the promotion and

marketing to taxpayers a system of trusts and to prepare tax returns for

these taxpayers for the intended purpose of defrauding the United States by

impeding the IRS from collecting the proper amount of federal taxes.

Sherriffs admitted to making false statements to a potential client related

to his business background and admitted that he knew the PROTEC trust system

was set up to evade the payment of federal taxes.

Owner of Insurance Company Convicted of Using Abusive Trust Arrangements to

Evade Taxes

On July 1, 2005, in Urbana, IL, Denny R. Patridge, operator of Patridge

Insurance Services, Inc., was convicted of tax evasion, wire fraud, and

money laundering.  The evidence presented at trial established that Patridge

established "trusts" which he used to conceal his earnings, hide the origin

of his income, deceive the IRS, and circumvent personal income taxes.

Patridge placed funds in bank accounts which bore the names of his "trusts"

and claimed on trust tax returns that the funds had been distributed to an

offshore trust.  At all times, however, Patridge retained full control over

funds in the trust bank accounts and enjoyed the beneficial use of those

funds, which made the income taxable to him personally.

The trial evidence also established that Patridge did not report a

substantial amount of his income on returns he filed for 1996 and 1997.  In

2000, after the IRS notified Patridge that it had made a formal assessment

of the 1996 and 1997 back taxes he owed, Patridge liquidated his investment

accounts, set up an "offshore" account, and placed approximately $200,000 in

the offshore account.   Patridge also evaded approximately $19,523 in taxes

for calendar year 1999 on taxable income of approximately $76,796.  He

evaded those taxes by, among other things, transferring money he earned as

income to a foreign account, concealing that money from the IRS, using the

money to pay personal expenses, and failing to file an individual income tax

return.

According to the evidence presented at trial, shortly after the IRS informed

Patridge that a lien could be placed on his property if he failed to pay his

1996 and 1997 income taxes, Patridge set up a system to hide his assets from

the IRS.  He began to move his money offshore to an account that was under

his control but not under his name.  He established a new account at Edgar

County Bank and Trust in Paris, Illinois, in his own name, through which

funds could be directed offshore.  In October, 2000, he wired approximately

$200,000 in funds from the account at Edgar County Bank to an account at a

bank in St. Kitts held in the name of Nevis American Trust Company, an

entity which maintained the funds on behalf of Sultan Services, Ltd.  Sultan

was under Patridge's direction.

After he transferred $200,000 to St. Kitts, Patridge then took steps to

prevent the IRS from obtaining a first lien on his real estate.  He caused

the mortgage on his home in Strasburg to be recorded with the clerk of

Shelby County, Illinois, with a $100,000 "loan" from a corporation

controlled by Patridge.  In October 2000, Patridge wired $100,000 from an

offshore location to a corporation he controlled in the U.S.  The purpose of

the transfer was to provide the corporation with sufficient funds to "loan"

Patridge $100,000, using his home in Strasburg as security for the loan.

Then, after Patridge transferred $100,000 from offshore to the U.S. and

established a false mortgage, he transferred the money back offshore and was

able to use the money as he personally desired.

The evidence also showed that Patridge had obtained the sham trusts that he

used to conceal assets and evade taxes from an entity known as Aegis,

located in Palos Hills, Illinois, and that Patridge assisted in the sale of

at least one Aegis trust package.  Patridge also utilized a business, known

occasionally as Offshore Consulting Services (OCS) and Laughlin, Inc., run

by Terry Neal out of Portland, Oregon to set up a nominee company in St.

Kitts, and Nevis and one in Reno, Nevada.

Business Owner Pleads Guilty to Submitting False Claim for Employment Tax

On June 27, 2005, in Los Angeles, CA, George Henry Jesson, owner of No Time

Delay Electronics, Inc., pleaded guilty to submitting a false claim to the

Internal Revenue Service for the 1997 federal employment tax withholding for

himself and his wife in the amount of $61,388.  Jesson admitted that in May

2000 he signed and filed a false, fictitious, and fraudulent IRS Form 941c,

Supporting Statement to Correct Information, and amended Forms W-2c,

Corrected Wage and Tax Statements, for No Time Delay Electronics for 1997

which falsely reported that $0 in wages had been paid to employees of his

company.  In reality, No Time Delay Electronics, Inc. paid wages of

$177,083.22 to Jesson and $273,236.20 to Jesson's wife in 1997, which Jesson

acknowledged to be taxable income.  Based on the false statement that No

Time Delay Electronics had paid $0 wages in 1997, Jesson falsely claimed

that the total amount of all employment taxes paid by the company in 1997

should be refunded.  In fact, the total refund requested for all employees

of No Time Delay Electronics was $215,454, although only $61,388 was

attributable to the employment tax withholding from the wages of Jesson and

his wife.  Jesson also admitted that prior to filing the false form 941c for

1997, he had attempted to obtain a refund of $61,388 by filing an IRS form

1040X (an amended federal income tax return) for himself and his wife,

claiming a refund of the $61,388 based on an assertion that wages were not

taxable income.  Jesson also admitted that he had filed an IRS Form 843,

Claim for Refund and Request for Abatement, requesting a refund of the

$61,388.  Jesson also admitted that the IRS did not refund any money to him

based upon those claims, but rather issued him a bill for additional taxes,

penalties and interest on the wages that defendant and his wife earned in

1997.  As part of the plea agreement, Jesson has agreed to pay restitution

to the IRS in the amount of $215,454, the amount originally refunded to

Jesson, and to file true and accurate tax returns for 1997 through 2004 and

pay over to the IRS all taxes, penalties, and interest assessed on such tax

returns.

Husband and Wife Sentenced for Using Abusive Trust Scheme to Evade Taxes

On June 27, 2005, in Denver, CO, Charles William Ledford was sentenced to

serve 24 months in prison for conspiracy to defraud the United States.

Ledford was also ordered to pay restitution totaling $506,000 to the

Internal Revenue Service.  Ledford pleaded guilty on April 11, 2005.

According to the plea agreement, Ledford and his wife were co-owners of

Service Engineering, Ltd., a heating ventilation air conditioning (HVAC)

service and sales business in Colorado Springs, Colorado.  The business

later operated as Service Engineering Trust.  In June 1992 the defendants

joined the Pilot Connection, a known organization that advocated that

individuals could "untax" themselves by hiding income through the use of

trusts.  Thereafter, the Ledfords created and recorded a number of trusts

within the State of Utah.  The Ledfords then began moving various personal

and business assets into these trusts to hide those assets and income from

the Internal Revenue Service.  >From 1992 through 1995, the Ledfords failed

to file personal income taxes or under reported their income to the IRS.  As

part of the conspiracy the defendants took distributions from the various

trusts for cash and personal expenses.  These distributions were not

reported to the IRS as income.  Some of the distributions were used to build

a new home, pay for their son's college tuition, and to pay Teller County

property taxes.  In 1998 the IRS notified Charles Ledford that he owed

$531,268 in taxes for years 1993 through 1995.  This amount was based on the

money he and his wife personally received from their business.

Owner of Apartment Complexes Sentenced to 100 Months for Conspiracy, Tax

Evasion, and Bankruptcy Fraud

On June 22, 2005, in Salt Lake City, UT, Stanley L. Wade was sentenced to

100 months in federal prison to be followed by three years of supervised

release.  In addition, Wade was ordered to file accurate tax returns within

18 months of his sentencing.  Wade was convicted by jury in March 2005 on

one count of conspiracy to defraud the United States, four counts of tax

evasion, one count of bankruptcy fraud and one count of making a false

statement in a bankruptcy proceeding.  According to evidence introduced at

trial, Wade owned eight residential apartment complexes which contained more

than 400 rental units.  Wade, along with his wife, conspired to hide

ownership of the rental units so they could conceal the income from the

rental units and avoid paying taxes.  The Wades transferred ownership of the

apartments to sham entities which they called Unincorporated Business

Organizations (UBO) and opened more than 40 bank accounts with signature

authority in their own names or nominees.  The Wades advised their

accountant that they had no income from the apartments because, having

transferred the rentals to the UBO, they no longer owned the rentals.  They

then filed false tax returns, failing to report the income derived from the

apartments, together with other sources of income.  Evidence at trial also

showed that Wade submitted documents as a part of a bankruptcy filing that

fraudulently omitted bank and brokerage accounts he had maintained within

two years immediately preceding the filing of a bankruptcy petition, real

estate he owned, residences, vehicles, boats, and wages.  During the years

of the conspiracy, the Wades failed to pay more than $5 million in federal

taxes.

Promoters of "We the People" Tax Fraud Group Sentenced

On June 7, 2005, in Los Angeles, CA, five individuals associated with a tax

fraud group known as "We the People" were sentenced for promoting bogus tax

shelters that falsely promised to limit exposure to federal income taxes.

1.	Lynne Meredith, the leader of the operation, was sentenced to 121 months in

prison.

2.	Gayle Bybee was sentenced to 60 months in prison;

3.	Teresa Manharth Giodano was sentenced to 40 months in prison;

4.	Willie Watts was sentenced to 36 months in prison; and

5.	Gregory Paul Karl was sentenced to 20 months in

prison.  Two more defendants in this case,

6. & 7.	Nora Moore and Betty Erickson,are scheduled to be sentenced on June 20, 2005.

On May 3, 2004, all seven individuals were convicted on various counts in

the indictment including failure to file income tax returns, conspiracy, and

mail fraud.  During the 13-week trial, evidence showed that the defendants

assisted taxpayers in forming phony "pure trusts" to conceal income and

assets from the government. Also, the defendants falsely told their

customers that paying taxes was "voluntary" and that they should file a W-4

or W-8 form with their employer claiming to be exempt from federal tax

withholding and encouraged taxpayers to send protest correspondence to the

IRS with the purpose of impeding and obstructing the IRS from collecting

these taxpayer's taxes.

Trial evidence also illustrated that beginning in 1991 and continuing until

April 2002, Meredith conducted seminars at which she sold books and bogus

"pure trusts" to people with the purpose of leading them to believe they

could legally shield income and assets from taxation. Meredith also wrote

books including "How to Cook a Vulture" and "Vultures in Eagle's Clothing,"

in which she falsely claimed that individuals could lawfully stop paying

income taxes, stop their employer from withholding income taxes, and refuse

to produce financial books and records to the IRS.  The books contained

examples of frivolous tax returns and protest letters.  Meredith earned more

than $8.5 million as a result of the scheme and, as with the other

defendants, did not file a Federal income tax return during these years.

Veterinarian Convicted of Tax Fraud

On June 3, 2005, in Erie, PA, Daniel Leveto, a veterinarian, was convicted

by jury on one count of conspiring to defraud the United States for the

purpose of impeding the IRS and on two counts of filing false individual

federal income tax returns.  According to the testimony presented at trial,

Leveto failed to disclose on his 1994 and 1995 federal tax returns more than

$2.5 million in gross receipts from his veterinary practice.  He also failed

to disclose on the tax returns that he controlled accounts in financial

institutions in the Cayman Islands and the Turk and Caicos Islands.  Leveto

has been incarcerated since his arrest on March 24, 2004.

Three CPAs Plead Guilty in Anderson's Ark and Associates International Tax

Scheme

On May 16, 2005, in Seattle, WA, Tara Lagrand of Naples, FL; Gary Kuzel of

Downers Grove, IL; and Lynden Bridges of Wheat Ridge, CO, pleaded guilty to

aiding and assisting in the filing of false income tax returns.  The

estimated tax loss as a result of the defendants filing false income tax

returns was between $2.5 and $5 million for each defendant.  These three

accountants were part of Anderson's Ark and Associates (AAA), an

organization through which fraudulent tax shelters and investment scams were

promoted and sold.  In their plea agreements, each defendant admitted that

they assisted AAA clients, from their respective states, by preparing and

filing the partnership agreements, promissory notes, and income tax returns

required to implement the "Look Back" program -- one of the two fraudulent

schemes promoted by the AAA organization.

Grass Valley Woman Sentenced in Tax Fraud Scheme

On May 9, 2005, in Sacramento, CA, Karen Louise Younce was sentenced to 37

months in prison followed by three years of supervised release and ordered

to pay a special assessment of $100 for her role in a large-scale abusive

trust scheme. Younce previously admitted, as a part of her plea, that during

1992 through August 2002, she participated in a conspiracy to impair, impede

and obstruct the IRS in the computation, assessment and collection of more

than $2 million in federal income tax liabilities. For a fee, Younce advised

and assisted her clients in transferring assets and income-generating

entities into domestic and foreign trusts, which she created and marketed

for the purpose of evading federal income taxes.  Younce also advised and

assisted her clients in cycling their U.S. income through off-shore bank

accounts she controlled and then returned the income to the clients.

Tax Attorney Sentenced to Prison for 15 Years

On May 5, 2005, in Little Rock, AR, Bobby Keith Moser, a former Little Rock

tax lawyer, was sentenced to serve 15 years in prison. Moser was sentenced

for violations of tax evasion, obstruction of justice, and money laundering.

He was ordered to pay $2.25 million in restitution for sophisticated schemes

carried out between 1996 and last year. Part of the restitution included

$212,648 to the IRS.  Moser was scheduled to enter a guilty plea in Detroit,

Michigan, but instead, he drove to Montreal, boarded a plane to Paris, and

then flew to Madagascar, where federal agents tracked him down in March

2004 - about the same time they discovered he had been bilking his clients'

trust funds.  Moser admitted that he arranged for about $9 million in

profits from the sale of a 1996 communications company to be hidden from the

IRS.  The $9 million was funneled into a trust represented as a tax

qualified retirement plan which would, in theory, owe no taxes on the trust

money until it was distributed.  The trust funds were made to appear to be

in the control of a third party, when in fact, they were controlled and

accessible by the client.  More than $1 million in Moser's assets have been

recovered by the government and forfeiture proceedings are pending.  These

funds will be used to repay some of his victims.

Jury Convicts Two Colorado Tax Fraud Promoters - Scheme Used Offshore Bank

Accounts, phony Loans and Debit Cards to Hide Income and Assets from IRS

On April 27, 2005, in Denver, CO, Paul D. Harris and Lester R. Retherford

were convicted on charges of conspiracy and willfully aiding and assisting in

the preparation of fraudulent tax returns.  The jury did not reach a

unanimous verdict as to the third defendant, Robert N. Bedford.  According

to the indictment, Harris, Retherford, and Bedford set up shell corporations

for small business owners that were used to conceal nearly $9 million in

taxable income in secret accounts in the Turks and Caicos Islands and other

foreign countries from 1992 through 1999.  The indictment also alleged that

although the defendants made it appear as though the offshore transfers were

payments for consulting services, most members used debit cards and loans to

spend the money they had concealed offshore.  To make use of this service,

many members allegedly paid an initiation fee of $50,000, according to the

indictment.

Two Colorado Defendants Sentenced in $120 Million Anderson's Ark and

Associates International Tax Shelter Case

On April 26, 2005, in Seattle, WA, James and Pamela Moran, residents of

Montrose, Colorado, were each sentenced to seven years imprisonment, to be

followed by three years supervised release, ordered to pay restitution of

$42,311,742, costs of prosecution totaling $66,488 and also ordered to

forfeit $850,863 in proceeds they earned from Anderson's Ark and Associates

(AAA), as well as their Colorado home and their Jeep Cherokee automobile.

On December 27, 2004, the defendants were convicted in connection with one

of the most wide-ranging tax schemes ever prosecuted.  The defendants were

convicted on a variety of charges, including conspiracy to defraud the IRS,

mail and wire fraud, money laundering and aiding and assisting the filing of

false tax returns.  The evidence introduced at trial established that, from

1997 through early 2001, the Moran's earned tens of millions of dollars in

fees from the sale of several fraudulent tax shelter plans over the

Internet.  The Moran's were the AAA Executive Education Officers.  As such,

they trained Information Officers, who were the primary sales force.  In

addition, the Morans promoted the fraudulent tax shelter plans domestically

and internationally.  The Morans cultivated their own AAA clients, with whom

they worked closely to further the AAA schemes.

Four Defendants Sentenced in $120 Million International Tax Shelter Case

On April 22, 2005, in Seattle, WA, four Anderson's Ark and Associates (AAA)

defendants were sentenced to prison terms ranging from eight to 20 years.

The defendants received the following sentences:

. Keith Anderson was sentenced to 20 years of prison to be followed by three

years supervised release and ordered to pay restitution of $63,525,860;

. Wayne Anderson was sentenced to 15 years of prison to be followed by three

years supervised release and ordered to pay restitution of $63,525,860 and a

fine of $25,000;

. Richard Marks was sentenced to 15 years of prison to be followed by three

years supervised release and ordered to pay restitution of $42,311,742 and a

fine of $25,000;

.  Karolyn Grosnickle was sentenced to eight years of prison to be followed

by three years supervised release, and ordered to pay restitution of

$42,311,742.

Each of the defendants was also ordered to pay costs of prosecution of

$66,288. Additionally, seven properties located in Costa Rica, the AAA

Administrative Office, and $28 million in laundered funds were ordered

forfeited. AAA spanned five countries and over 1,500 clients.  Both

Andersons, Marks and Grosnickle were convicted on charges of conspiracy to

defraud the government, mail and wire fraud, money laundering and aiding and

assisting the filing of false tax returns.  From 1997 through early 2001,

the defendants earned tens of millions of dollars in fees from the sale of

several fraudulent tax shelter plans over the Internet.

In addition to the sentencing on these four individuals, Richard

Grossnickle, executive director of two AAA entities, pleaded guilty on April

13, 2005, to a charge of obstruction of justice and is currently awaiting

sentencing.

"Institute of Global Prosperity" Principal Pleads Guilty to Tax Charges

On April 12, 2005, in Seattle, WA, Dwayne Robare pleaded guilty to a

superseding information charging him with income tax evasion for the 2000

tax year.  The information alleges that Robare became affiliated with the

Institute of Global Prosperity (IGP) in 1997 and for several years

thereafter operated and maintained its teleconferencing system located in

Marlboro, MA.  IGP members subscribed to the teleconferencing services by

remitting fees to a nominee entity named Independent Diversity Entrepreneurs

and Associates (IDEA).  Robare was a partner of IDEA and shared in the

profits generated from fees paid to IDEA.  In a statement of facts provided

to the court, Robare admitted to receiving income from his work with IGP

from approximately 1997 through 2002.  He further admitted that he used

various means to conceal his income from the IRS.  This included a false

trust with a domestic bank account which he obtained from Innovative

Financial Consultants in Arizona and an offshore trust and foreign bank

account which he obtained from Prosper International League Limited in the

Bahamas.  Robare admitted that the resulting tax loss totaled between

$120,000 and $200,000.  Robare agreed to cooperate fully with the IRS in the

ascertainment, computation, and payment of his correct federal and state

income tax liabilities.

Chiropractor was Client of Anderson's Ark & Associates

On March 23, 2005, in Sacramento, CA, Dr. David R. Funk, a former

chiropractor, was sentenced to a year in prison to be followed by one year

of supervised release.  Funk was also ordered to pay costs of $1,227 and an

assessment of $200.  Funk pleaded guilty to two counts of filing false

income tax returns on November 3, 2004.  Funk admitted in his plea agreement

that he filed false tax returns reporting negative adjusted gross income

which reflected his use of two tax evasion schemes that involved the

creation of shell companies to hide taxable income and create paper losses.

In one of the schemes, taxable income was diverted away from Funk on paper

through a series of corporate entities that in fact had no economic

substance.  Although Funk earned and used income, he did not report it on

his returns. The other scheme, Funk created a joint venture entity which

reported bogus losses which he reported on his personal tax return.  Funk

admitted evading over $183,000 in federal income taxes for tax years 1997,

1998, and 1999.  Funk was a client of Richard Marks, who was a leader of the

Anderson's Ark and Associates organization.  Marks was sentenced to 81

months in prison on November 14, 2002.

San Diego County Inventor Sentenced for Failing to Pay Taxes on Sale of

Company

On January 31, 2005, in Los Angeles, CA, John Zentmyer was sentenced to 33

months in prison for failing to pay income taxes on money generated from the

sale of his company.  Zentmyer was found guilty of tax evasion, one count of

loan fraud and three counts of structuring cash transactions to avoid

federal reporting requirements.  Zentmyer invented a wheel-locking device to

be used on four-wheel-drive off-road vehicles. After forming a company to

market his product, he sold the company for $1,008,000.  Zentmyer failed to

file a tax return that reported any of the funds generated by the sale, nor

did he pay any taxes on the income. Instead, he placed the funds into

offshore bank accounts, used bank accounts in the names of other persons and

entities, and conducted financial transactions using large amounts of cash.

Zentmyer owes $264,335 in back taxes.  The loan fraud conviction was based

on the submission of a false employment letter in connection with a loan

application to purchase a house.  Zentmyer, who represented himself at the

beginning of the trial and later represented himself jointly with an

advisory counsel, argued that he was not guilty of tax evasion because he

believed in good faith that he did not have to pay income taxes after

reviewing old Supreme Court cases. He also claimed that he structured his

financial transactions only because the bank required his social security

number to file its report with the government and his religious beliefs

prevented him from divulging his social security number.

Man Sentenced to Prison for Filing False Tax Return

On January 4, 2005, in Cedar Rapids, IA, Troy Davis was sentenced to 21

months in prison, followed by one year supervised release and ordered to pay

$318,000 in restitution to the IRS.  Davis admitted that he filed his 1996

tax return knowing he falsely understated his income by excluding income he

received from the sale of his business, Excel Medical.  Davis attempted to

hide his taxable gain through the use of off-shore trusts.

For more information on these convictions, see U.S. Department of Justice

press release.

Offshore Tax Shelter Promoter Sentenced to Prison

On December 6, 2004, in San Francisco, CA, Jerome Schneider was sentenced to

six months in prison for his role in a conspiracy to defraud the IRS.

Schneider was also ordered to pay a fine of $4,000 and a $100 special

assessment.  He had previously paid $100,000 in restitution.  Schneider was

indicted on December 19, 2002, on one count of conspiracy and 22 counts of

mail and wire fraud in connection with the marketing and sale to taxpayers

of offshore banks and corporations.  He pleaded guilty on February 11, 2004,

to the conspiracy charge.  Schneider admitted marketing and selling offshore

entities such as those licensed by the South Pacific Island of Nauru as

international banks.  According to Schneider's plea agreement, he would

cooperate with the Government.  His plea agreement also stated he would

appear in national media outlets to explain his offshore arrangements were a

sham and urge taxpayers who bought into his scheme or other offshore schemes

to contact the IRS and reconcile their tax matters.

Former Chiropractor, Nutrition Specialist and Syndicated Radio Talk Show

Host sentenced

On October 22, 2004, in West Palm Beach, FL, Bruce E. Hedendal was sentenced

to a term of imprisonment of 36 months, supervised release term of 3 years

and ordered to pay restitution of $717,899 to the IRS.  In August 2000, a

federal grand jury charged Hedendal with three counts of income tax evasion

for the years 1993 through 1995.  According to the indictment, Hedendal

attempted to evade paying a total of about $180,000 in taxes on income of

about $561,000; failed to file income tax returns; concealed his true income

through the use of sham trusts and made false representations to the IRS.

When summonsed to face tax evasion charges, Hedendal fled to Canada and

ultimately to Australia, where he practiced under the names Erick Hedendal.

In October 2003, the Defendant was located in Australia and was extradited

back to the U.S.    On July 2004 Hedendal pled guilty to one count of income

tax evasion.

FY2004 Archive Examples of Abusive Tax Schemes Investigations

 FY2004 Examples of Abusive Tax Scheme Investigations

The following examples of abusive tax schemes fraud investigations are

excerpts from public record documents on file in the courts in the judicial

district in which the cases were prosecuted.

Michigan Couple Sentenced for Tax Fraud

On September 27, 2004, in Grand Rapids, MI, Andrew Stuart Ouwenga and Karen

Ann Ouwenga were sentenced following a May 26, 2004, jury conviction on

several tax-related felony offences. Andrew Ouwenga received 60 months

imprisonment and Karen Ouwenga received 51 months imprisonment, which are

each followed by two years' supervised release. They must also cooperate

with the Internal Revenue Service, file back tax returns and make

arrangements to pay all taxes due and owing, along with any interest and

penalties. They must also pay court cost of $5,016.  The Ouwengas were

convicted of conspiracy to defraud the United States by impeding and

obstructing the lawful functions of the Internal Revenue Service, evading

their 1997 federal income tax, and two counts of willfully and unlawfully

disobeying a grand jury subpoena. In addition, Andrew Ouwenga was also found

guilty on three counts of tax evasion involving his 1998, 1999, and 2000 tax

years.  The Ouwengas' accountant prepared their 1994 federal income tax

return, which claimed more than $75,000 in income, however, the defendants

instead filed a frivolous tax return claiming they had no income and

requested a tax refund of their 1994 withholdings of more than $10,000.

Andrew Ouwenga informed his accountant that he would not file tax returns or

pay income taxes because "the Sixteenth Amendment was never ratified."

Despite gross deposits of over $6.3 million and gross business receipts of

$1.7 million into their bank accounts, the Ouwengas failed to file their tax

returns. From 1993 through 1999, the Ouwengas created at least nine sham

trusts, which enabled them to conduct their personal and business affairs

while evading their income tax obligation.

Attorney Pleads Guilty for Role in Offshore Tax Evasion Schemes

On September 17, 2004, in San Diego, CA, B. Roland Frasier, an attorney for

a prominent San Diego ophthalmologist, Dr. Glenn Kawesch, pleaded guilty to

tax evasion, filing false returns, and money laundering.  Frasier admitted

that he transferred $1.25 million of Dr. Kawesch's profits from his medical

practice to an offshore account at the Bank of Nevis to avoid paying incomes

taxes.  Frasier also admitted he underreported $3.3 million of his own

income for the tax years 1997 through 2001, which resulted in a tax loss of

$934,000. In addition, Frasier admitted he entered into a series of sham

agreements involving a business he helped take public. He did not disclose

to the company's president about his ownership of a corporation in Nevis

that received $300,000 and 7 million shares.  Frasier had telemarketers sell

more than 1.3 million of the shares which netted more than $1 million.

Consultant Used Abusive Trust Arrangements to Hide Income

On September 16, 2004, in Grand Rapids, MI, John F. Napieralski was

sentenced to 30 months in prison to be followed by 2 years supervised

release and ordered to pay a fine of $5,000.  Additionally, Napieralski was

ordered to cooperate with the IRS in filing all back tax returns and paying

all taxes due and owing, along with any interest and penalties.

On June 17, 2004, Napieralski pleaded guilty to four counts of tax evasion

for the tax years 1997 through 2000.  He admitted that he created a sham

trust called, "The Educational Systems Trust" (T.E.S.T.) and instructed

payments, from his consulting services to Sto-Ex, Inc., to be made payable

to T.E.S.T.  During 1997 through 2003, more than $950,000 was deposited into

T.E.S.T.'s bank account, with more than $600,000 in income coming from

Sto-Ex., Inc. Napieralski admitted that he willfully attempted to evade and

defeat a substantial portion of his income tax due and owing by failing to

file tax returns reporting his business gross income received from Sto-Ex,

Inc., coupled with affirmative acts of evasion.

Former Owner of California Dietary Supplement Company Sentenced in Federal

Fraud Conspiracy

On September 13, 2004, in Los Angeles, CA, Almon Glenn Braswell was

sentenced to 18 months in prison and ordered to pay $10,455,367 in back

taxes, interest, and penalties.  Braswell pleaded guilty on March 2, 2004,

to conspiring to evade millions of dollars in corporate income taxes during

a scheme that overstated the business expenses incurred by one of his

companies, Gero Vita International, Inc. on its federal tax returns.

Braswell acknowledged that his scheme caused Gero Vita to underpay its taxes

by $4,468,460.

Accountant Sentenced to 37-Month Prison Term for Mail Fraud and Tax Evasion

On August 23, 2004, in Miami, FL, Thomas Sewell, a certified public

accountant, was sentenced to 37 months in prison, followed by three years

supervised release, and ordered to pay restitution in excess of $7 million

to the victims.  Sewell previously pleaded guilty to conspiracy to commit

mail fraud and for filing false tax returns. Sewell was charged in

connection with his participation in an investment fraud scheme, as a result

of which investors lost over $7 million.   Sewell associated himself with

the scheme by recruiting investors from among his accounting practice

clientele. Sewell falsely advised his clients that their investments would

be safe and that he was personally monitoring the funds. Significantly,

Sewell failed to advise his clients that he was receiving commissions on the

investments that he brought in and failed to disclose on his 1997 and 1998

federal income tax returns that he had received additional income of more

than $140,000 from his participation in the scheme.

Four-Week Trial Ends in Five Convictions in Tax Evasion Case

On August 20, 2004, in Salt Lake City, UT, after a four-week trial, a

federal jury convicted five Utahans of conspiring to defraud the United

States through the establishment of an abusive trust scheme involving

offshore entities marketed through the name of Anglo-American International,

Provo, Utah.  Convicted of conspiracy were

1.	Ozy J. Neeley,

2.	Paul J. Young,

3.	Kevin J. Crockett,

4.	Chad L. Merica, and

5.	Robert F. Dodenbeir.

Crockett was also convicted of two counts of aiding and assisting in the filing of false

income tax returns.  Eight people have been convicted of participating in

this conspiracy.  The leader of the Anglo-American entities,

6.	kirk Koskella

is currently serving a 10-year sentence in federal prison.  Two other

individuals,

7.	Dennis Shaw and

8.	Stacie Bateman are awaiting sentencing

following their guilty pleas to conspiracy at an earlier date.

Three Sentenced for Using Sham Trusts and Corporations to Hide Business

Profits from IRS

On July 20, 2004 in Akron, OH, Gary Harris was sentenced to 151 months in

prison to be followed by 3 years supervised release and fined $95,000.  On

June 23, 2004, Michael Kotula was sentenced to 70 months in prison to be

followed by 3 years supervised release.  In addition, Kotula was ordered to

pay a $100,000 fine, the costs of prosecution, and $82,806.83 in restitution

to the Internal Revenue Service.  Also sentenced was Tamara Schwentker

Harris receiving 15 months imprisonment to be followed by 2 years supervised

release, and ordered to pay $17,054 in restitution to the Internal Revenue

Service.  In March 2004, after a four-week trial, the jury found all three

defendants guilty of conspiring to defraud the United States.  In addition,

the jury convicted Harris and Kotula on three counts and one count of income

tax evasion, respectively.  At trial, the evidence proved the defendants

used a maze of trusts and corporations to try to hide approximately $18

million in income generated by various businesses they controlled.  Between

January 1, 1994 and July 8, 2003, they paid little or no taxes on the income

earned.  Nonetheless Mr. Harris lived lavishly, acquired several homes, a

jet way for his ranch in Conneaut, and an antique Mercedes sports car which

he claimed was worth $250,000.  Mr. Harris has been in federal custody since

his arrest in July 2003.  He had previously been convicted of tax evasion

for tax years 1987, 1989, and 1990.  In addition, between 1998 and 2002,

when Mr. Harris was in federal prison after convictions for racketeering and

income tax evasion, Mr. Kotula and Ms. Schwentker Harris kept Mr. Harris'

businesses running and continued to operate this illegal conspiracy to

conceal income from the IRS.

Co-Founder of Global Prosperity Pleads Guilty to Tax Fraud

On July 15, 2004, in Seattle, WA, Daniel Andersen, co-founder of Global

Prosperity, pleaded guilty to tax charges of conspiracy to defraud the

United States by impeding the Internal Revenue Service.  In a statement of

facts submitted to the court, Andersen admitted that he conspired with

others to defraud the IRS by utilizing a system of bogus trusts, nominee

entities and related domestic and offshore bank accounts to conceal millions

of dollars in income generated from the sale of Global Prosperity products.

Andersen admitted that he and his accomplices maintained the anonymity of

Global Prosperity by changing the name of the business, using mail drops to

conceal its location, conducting financial transactions in cash, and

discouraging the use of Social Security numbers to escape notice by the IRS.

Also, Andersen admitted that he failed to file individual income tax,

corporate income tax, trust income tax and partnership returns; and

declarations of a financial interest in, or signature authority over, a

foreign bank account, as required by law.  Finally, Andersen admitted that

his actions caused a tax loss of between $2.5 and $7 million.

Nevada Author Sentenced for Promoting Tax Fraud Schemes

On July 14, 2004, in Reno, NV, Lawrence Turpen pleaded guilty to conspiracy

to defraud the IRS.  In his plea agreement, Turpen admitted that he became a

full-time financial consultant specializing in international investing and

tax planning.  He solicited clients at speaking engagements; through his

1990 book, "Offshore Options for Small Business;" and through a website

advertising his products and services.  Turpen advised clients to conceal

their personal and domestic business income in offshore entities located in

countries that did not provide financial information to the United States.

He also helped his clients structure sham business transactions to make it

appear as if their personal or domestic business income interested in

offshore entities and to use nominees or administrators to further conceal

the true ownership and control.  Turpen helped his clients repatriate the

untaxed money by advising them to create fictitious loans from their

offshore entities to pay for personal purchases, including cars and homes,

as well as having the offshore entities pay for personal vacations or give

untaxed "educational grants" to their children.  On December 13, 2004,

Turpen was sentenced to three years probation and six months of home

detention with electronic monitoring.  In addition, Turpen was ordered to

pay a $10,000 fine, serve 300 hours of community work service, and must

cooperate with IRS concerning the back taxes that he owes.

Promoter of Sham Trusts Pleads Guilty to Tax Fraud Charges in Arizona

On June 7, 2004, in Phoenix, AZ, Mark D. Poseley pleaded guilty to

conspiracy to defraud the Internal Revenue Service for his role in marketing

bogus trusts through an organization known as Innovative Financial

Consultants (IFC).  Poseley also pleaded guilty to willfully failing to file

his 2000 income tax return, despite having earned substantial income from

his work with IFC.  Poseley admitted he worked as an IFC salesman and sold

both onshore and offshore trust packages.  He admitted that he falsely

represented to taxpayers that they could lawfully avoid paying income taxes

by placing their income and assets into trusts, despite remaining as the

trusts' "managing directors."  Poseley admitted he ignored written

publications from the IRS and other sources which directly contradicted the

false claims he made.

Pinellas County Man Sentenced for Tax Evasion Scheme

On May 7, 2004, in Tampa, FL, William Timer was sentenced to five years' in

prison, to be followed by three years supervised release.  Timer was also

ordered to pay restitution to the Internal Revenue Service of $928,864 and

imposed a fine of $25,000.  Timer was convicted of four counts of income tax

evasion and three counts of filing false corporate income tax returns.

Timer purchased the AEGIS trust system promoted out of Chicago, IL.  He then

used a series of domestic and foreign companies to divert and conceal

corporate profits in order to evade the payment of taxes on those profits.

As a result of these actions, Tiner failed to report in excess of $2.5

million in income between 1996 and 1999 and thus evaded the payment of over

$900,000 in income taxes.

Tax Cheaters Headed to Prison and will Pay Government $570,000

On April 1, 2004, Helen M. Smith and her brother Leroy Sbrusch were

sentenced to serve two years in federal prison for tax evasion, failure to

file returns, and conspiracy to defraud the IRS.  On Wednesday, March 24,

co-defendant Ken Smith was sentenced to serve 15 months for his role in the

conspiracy.  All three defendants were convicted of conspiracy to defraud

the IRS.  Helen Smith and Leroy Sbrusch were also each convicted of failure

to file 1996, 1997, and 1998 income tax returns, and also of evading Helen

Smith's 1998 income taxes.  Sbrusch was also convicted of one count of

structuring financial transactions to avoid currency transaction reporting

requirements in 1998.  Helen Smith and Leroy Sbrusch were ordered to pay

over $485,000 in restitution to the United States for back taxes, fined each

of them $25,000, and ordered them to pay over $35,000 in costs of

prosecution.  After serving their prison terms, each defendant will be on

supervised release for three years, and will be required to file tax returns

and cooperate with IRS examinations of their tax liability.

The evidence at trial showed that Helen Smith owned two laundromats.  Her

gross income was over $440,000 for 1996, over $540,000 for 1997, and over

$700,000 for 1998.  Despite this income, she failed to file a tax return for

any of these years, or any year since.  Neither Helen Smith nor Leroy

Sbrusch had in fact filed a return since 1990.  After the sale of Wasilla

Wash Day for $700,000 in April 1998, the evidence showed that the defendants

engaged in a complicated scheme to launder the profits to evade collection

by the IRS.  The three defendants used various means to conceal the

proceeds, including the purchase of $45,000 in gold and silver under a

third-party name, the purchase of land in Texas under false names, and

simply having large-denomination cashier's checks issued to nonexistent

entities and keeping them in their office for six months to a year.  Sbrusch

's structuring conviction arose from his withdrawal of $8,000 cash on April

15, 1998, followed by withdrawals of $8,500 on April 17 and $7,300 on April

18.   Sbrusch testified that he and Helen Smith attended seminars and

purchased books offered by Southern California tax activist Lynne Meredith

and her organization, "We the People."  Sbrusch admitted purchasing "trusts"

from Meredith that were used to hold assets purchased with the proceeds of

the Wasilla Wash Day sale.

Provo Man Sentenced for Tax Evasion and Mail Fraud

On February 26, 2004, in Salt Lake City, UT, Albert Earl Carter was

sentenced to 51 months in prison, followed by three years supervised release

and ordered to pay $1,962,371 in restitution.  Carter was also ordered to

file his 1996 and 1997 tax returns and establish a payment schedule for

those liabilities within 30 days.  Carter plead guilty to tax evasion and

mail fraud for his role in a scheme he devised to defraud investors of their

money through an investment program often referred to as a "doubling

 program" and his efforts to evade paying income tax for the 1996 tax year.

Carter not only failed to file his tax return, but also committed acts of

evasion, including the use of a VISA card account from an offshore bank to

pay personal expenses, by the transfer of money to the VISA card account,

and by the transfer of records reflecting income and expenses offshore.

Between 1995 and 2000, Carter was "managing director" of Allied

International Resources, (AIR) and represented that the company had offices

in Utah and Antigua.  During this time, Carter and his associates solicited

approximately $3,000,000 from investors for the "doubling program."   Carter

represented that the investment was for a 12-month term, was protected by a

guarantee against loss for 108 percent of the investment, and the guarantee

was backed by a trust fund of over five times the amount AIR was obligated

to pay out.  The letter represented, that an investor could expect 200

percent of the investment at the annual anniversary date.   Carter admitted

he did not inform investors that investor funds brought in through the

investor program would be used to pay off other investors -- essentially a

Ponzi scheme -- and also used to pay the personal expenses of Carter and

operating expenses of AIR.

Sellers of Bogus Tax Advice Program Plead Guilty to Tax Charges

On February 12, 2004, in Washington, DC, the Department of Justice announced

that John J. Rizzo and his wife Carol A. Rizzo, residents of Phoenix,

Arizona, pleaded guilty to charges of conspiracy and willfully failing to

file their income tax return.  Rizzo also pleaded guilty to willfully aiding

and assisting in the preparation of a false income tax return and perjury

before the grand jury.  The defendants admitted, in their plea agreements

that from 1999 to 2001, Mr. Rizzo was a prominent vendor with the Institute

of Global Prosperity (IGP). At seminars hosted by IGP, Rizzo promoted the

Millennium 2000 Reliance Defense Program (M2K) package to thousands of

people at offshore seminars and resulted in more than $4 million in sales.

The Rizzos also admitted they provided materials and documentation that

purported to prove, among other things, that one could lawfully stop filing

income tax returns and cease having income taxes withheld from personal

wages based upon the long-rejected notion that the Sixteenth Amendment to

the Constitution had not been legally ratified. They further admitted they

concealed the income earned from the sales of M2K packages during the period

1999 through 2002, by using a variety of dishonest and deceitful means,

including the use of offshore bank accounts and third-party merchant

accounts to conduct credit card sales.

Economic Development Commission Beneficiary Partner Pleads Guilty to Tax

Evasion

On February 12, 2004, in Christiansted, St. Croix, Gary J. Payne pleaded

guilty to a two count Information charging him with attempt to evade and

defeat tax for calendar years 2000 and 2001.  Beginning in 2000, Payne

participated in a sophisticated scheme designed to disguise his legitimately

earned United States income as "wages and partnership distributions" paid to

him by a Virgin Islands business that had been issued an Industrial

Development Program certificate which granted certain industrial development

benefits, including a 90% reduction on individual income tax liability (the

Tax Credit).  The scheme created the appearance that his income was from a

Virgin Islands source or effectively connected to a Virgin Islands business

and thus eligible for the Tax Credit.  As a result of the scheme, Payne

filed his 2000 and 2001 income tax returns with the Virgin Islands Bureau of

Internal Revenue claiming falsely to be a Virgin Islands resident and

claiming Tax Credits of $171,364 and $179,488, respectively.  His reported

tax liability before the credits totaled $399,512 for both years.  As a

result of the credits, Payne only paid $48,660 of his reported liability to

the Virgin Islands and paid no income taxes to the United States as he was

required to.

Jerome Schneider Pleads Guilty

On February 11, 2004, in San Francisco, CA,  Jerome Schneider pled guilty to

conspiracy to defraud the Internal Revenue Service in violation of 18 U.S.C.

§ 371.  Schneider and his co-defendant, Eric Witmeyer, were indicted by a

Federal Grand Jury in San Francisco on December 19, 2002.  They were charged

with conspiracy and mail and wire fraud in connection with the marketing and

sales to U.S. taxpayers of offshore banks and/or corporations.  The

defendants then caused those entities to be decontrolled which was a process

used by the defendants to attempt to conceal the U.S. taxpayer's ownership

in the offshore bank or corporation, in order to evade IRS reporting

requirements for taxpayers having an interest in foreign accounts and to

evade the payment of tax on income transferred to and/or earned by the

offshore bank accounts.  Witmeyer, an attorney, pled guilty to the

conspiracy count on January 23, 2003, and agreed to co-operate with the

government against Schneider.  The sentencing of Schneider has been

scheduled for September 10, 2004.

CPA Promoted Abusive Trusts in Tax Evasion Scheme

On February 6, 2004, in Tampa, Florida, Michael J. Maricle, a Certified

Public Accountant, was sentenced to 30 months in prison.  Maricle pleaded

guilty on March 5, 2003, to two counts of aiding in the preparation and

filing of false income tax returns.  Maricle assisted two different clients

in filing false income tax returns which disguised large sums of income

through the use of the AEGIS system, a scheme which entails the use of

abusive trusts in ordered to hide income and evade the payment of taxes.  In

addition to jail time, Maricle was ordered to assist the IRS in the

computation of all taxes due and owing on the part of his two clients.

Retired Pilot Sentenced to Prison

On January 20, 2004, in Rockford, IL, Ralph Waldo Kough, a retired

commercial pilot, was sentenced to 20 months in prison followed by three

years supervised release for evading more than $260,000 in federal income

taxes.  Kough admitted that he did not file tax returns and did not pay any

federal income taxes on his pension income for the years 1995 through 2002.

In addition, during 1998 Kough received a lump sum distribution from his

401(k) plan of $583,425.76.  Kough admitted that he attempted to conceal his

401(k) distribution from the IRS by 1) depositing the $583,425.76 into four

separate bank accounts in three separate states; 2) providing those banks

with IRS Forms W-8 which falsely stated he was not a United States Citizen;

and 3) withdrawing most of the funds from those accounts in cash amounts

$9000 and $9900.

Promoter of Abusive Trusts Scheme Pleads Guilty

On December 12, 2003, in Phoenix, Arizona, John F. Poseley pleaded guilty to

his role in a conspiracy to defraud the U.S. Government by marketing bogus

trusts through an organization known as Innovative Financial Consultants.

According to court documents, the conspiracy charge alleged that from 1995

through 2003, Innovative Financial Consultants, based in Tempe, Arizona,

created and sold over 3,000 bogus "onshore" and "offshore" trust packages

for financial gain by falsely claiming that taxpayers could avoid paying

income taxes by placing their income and assets into such a trust.  Poseley

admitted that he had falsely represented to taxpayers that they could avoid

paying income taxes by placing assets into the trusts while retaining use,

control, and dominion of those assets.

Man Sentenced for Evading Over $235,000 in Taxes

On December 3, 2003, in Kansas City, Missouri, Mark A. Fronce was sentenced

to 15 months in prison, ordered to pay a $2,000 fine, and ordered to pay

$434,522 in back taxes with interest and penalties. Fronce pleaded guilty on

June 26, 2003, to one count of tax evasion.  By pleading guilty, Fronce

admitted that he had taxable income of approximately $565,806 in 1997 and

should have paid $235,486 in taxes.  Instead, Fronce did not file a tax

return and attempted to conceal his true income by diverting his income to

"trust" bank accounts.

Former CPA Sentenced to 39 Months in Prison for Tax Fraud Using Abusive

Trust Arrangements

On November 24, 2003, in Prescott, Arizona, Ralph N. Whistler, a certified

public accountant, was sentenced to 39 months in prison for aiding and

assisting in the preparation and filing of false 1995 income tax returns.

Whistler was convicted on July 30, 2003, after a jury trial in Prescott,

Arizona. According to evidence at trial, Whistler purchased a so-called

"trust package" that purported to legally reduce his federal income tax

liabilities. Whistler then modified this package which he promoted and sold

to approximately 20 clients for between $5,000 and $10,000 per client.

Clients testified that Whistler directed them to transfer business income to

and through a series of bank accounts titled in the names of trusts.

Whistler claimed the amounts placed in these bank accounts as deductions on

the client's federal income tax returns

Three Sacramentans Sentenced to Lengthy Prison Sentences in Tax Fraud,

Investment Fraud and Money Laundering Scheme

On November 4, 2003, in Sacramento, CA, Herbert Arthur Bates, Christopher R.

Bates and David Larry Smith were sentenced to lengthy prison terms after

being convicted of conspiracy to defraud the United States by impairing and

impeding the IRS in the assessment and collection of income taxes,

conspiracy to engage in mail and wire fraud, and conspiracy to engage in

money laundering.   Herbert Bates, Christopher Bates, and David Larry Smith

were sentenced to 136 months, 63 months and 151 months in prison,

respectively.  All three were also ordered to pay restitution in the amount

of $1,738,520, a criminal forfeiture of $1,000,000, and serve 36 months of

supervised release.   Evidence presented at trial proved that the defendants

sold a form of trust, which they called an Unincorporated Business

Organization (UBO), to approximately 249 investors.  The defendants charged

between $3,000 and $7,500 for the creation of these UBO's.  Herbert Bates

and Smith advised clients that they could transfer all of their income and

assets to the UBO, and after transferring their income and assets, the

clients no longer had to file individual income tax returns nor pay federal

income taxes.

Executive Sentenced to 20 Years, Ordered to Pay $92 M in Restitution in

Investment Fraud and Money Laundering Case

On October 31, 2003, in Cleveland, OH, J. Richard Jamieson was sentenced to

20 years imprisonment, ordered to serve a three-year term of supervised

release, pay $92,125,491 in restitution, and pay a Special Assessment of

$15,700. Jamieson was found guilty of federal money laundering charges and

conspiracy to commit mail fraud.  On January 23, 2002, J. Richard Jamieson

was indicted along with 16 other individuals in connection with a scheme to

defraud life insurance companies and investors throughout the United States.

The indictment charged that the defendants, including Jamieson, conspired to

defraud approximately 2,850 investors in viatical settlements of

approximately $105,000,000.  Jamieson was also charged with laundering his

profits from the fraud scheme using domestic and foreign trust entities.  As

a result of this trial and subsequent conviction, there is a special

personal judgment against Jamieson in the amount of $28,243,980 that was

rendered by the jury in his trial and relates to the funds involved in the

money-laundering scheme.  Jamieson must also forfeit all the assets in over

50 domestic and foreign companies, corporations, partnerships, and trusts,

which Jamieson owned and controlled. Additionally, Jamieson was ordered to

forfeit his personal assets, including his million-dollar residence, his

million-dollar vacation home, the contents of his investment accounts and

other personal property.  On October 28, 2003, Judge Katz amended his

original order of forfeiture to include $5,675,075 in other assets.

Institute of Global Prosperity Affiliate Sentenced to 21 Months

On October 10, 2003, in Seattle, WA, Laura Jean Marie Struckman, an

affiliate of the Institute of Global Prosperity, was sentenced to 21 months

in prison to be followed by three years supervised release. Struckman was

convicted by jury on May 28, 2003, of conspiracy to structure a financial

transaction. Trial evidence showed that Struckman and an unindicted

co-conspirator engaged in a 14-month conspiracy from June 1997 through

August 1998 to evade currency reporting requirements by making cash

withdrawals of over $960,000 in 122 separate transactions, none of which

exceeded $10,000. The evidence further established that Struckman was the

co-signer on three nominee bank accounts into which she and another

individual deposited over $3.7 million, earned from IGP, during the time

period of the conspiracy. Struckman faces a maximum statutory penalty of

five years imprisonment and a $250,000 fine. The Institute of Global

Prosperity was an organization that encouraged its members to sell various

products for profit - such as "foreign trusts," "pure trusts," as well as

other reliance packages - that although touted as legal means to avoid

taxes, were nothing more than tax evasion devices. The organization

discontinued its operations in May 2002.

Where Do You Report Suspected Tax Fraud Activity?

----------------------------------------------------------------------------

----

 My_question_is: Canadian-specific

Subject:        tax shelters

Expert:         taxman at centa.com

Date:           Tuesday November 22, 2005

Time:           10:45 PM -0800

QUESTION:

what can you tell me about putting money offshore where it can't be taxed. i

have a friend who wants to do this. I think you may need a Nevada corp or

IBC

Thanks for your time

 XXXXXX

===================================

david ingram replies:

I guarantee that an American or a Canadian can NOT "LEGALLY" put money

offshore where it would not be taxable. "LEGALLY" means that anything a

Canadian earns out of the country is taxable IN Canada as long as he or she

is a resident of Canada.

Jerome Schneider got away with setting up over 1,000 "tax shelter" offshore

Corporations, Banks, and other vehicles for over 12 years.  Three years ago

he was arrested in Vancouver and ended up being sentenced to 18 months in

jail for setting them up for others.  As part of his plea bargain he turned

about 1,70 of his clients and the lawyers and accountants who had helped him

over to the authorities.  Others who helped people with offshore entities as

tax shelters were Scott Brown, Fred Seymour Hofman, and Nick Mazee.  These

gentleman all disappeared with about 30,000,000 each of their clients'

money.

Hofman was found in Australia a year ago as explained in the following from

http://www.canadianchristianity.com/cgi-bin/bc.cgi?bc/bccn/0704/01fleece

A similar modus operandi was used by Fred Seymour Hofman Sr. to bilk members

of the First Christian Reformed Church in Vancouver out of millions of

dollars in the 1980s and '90s before he skipped town in 1991.

Before he fled the country, six lawsuits claiming more than $10.5 million in

losses had been filed against the churchgoer. In 1993, the RCMP laid 61

counts of fraud against him as well.

Hofman was a fixture at the church for two decades. And, as a certified

general accountant, he was also entrusted as the church treasurer. People

felt they could count on him to give them investment advice, and several

couples handed him significant sums to place in U.S. treasury bill

investments he claimed would net them high returns and shelter them from

paying Canadian taxes on the earnings.

Because Hofman wasn't registered to handle such investments , at the time he

was fined $50,000 and banned for trading for five years by the BCSC. He was

also kicked out of the General Accountants' Association of B.C.

This year he was tracked down in Australia illegally soliciting investments

in a remote agricultural area near Cairns. He was misrepresenting himself as

a minister.

You can find out about the Schneider affair at

http://www.quatloos.com/Jerome_Schneider_exhibit.htm

If someone "DOES" set something up for you which is secret enough the tax

man might not find it, that same fellow is just as liable to run away with

the money as Hofman, Masee and Brown did OR turn you in to the authorities

as Jerome Schneider did.

SUGGESTED PRICE GUIDELINES - May 17, 2008

david ingram's US / Canada Services

US / Canada / Mexico tax, Immigration and working Visa Specialists

US / Canada Real Estate Specialists

My Home office is at:

4466 Prospect Road

North Vancouver,  BC, CANADA, V7N 3L7

Cell (604) 657-8451 -

(604) 980-0321 Fax (604) 980-0325

Calls welcomed from 10 AM to 9 PM 7 days a week  Vancouver (LA) time -  (please do not fax or phone outside of those hours as this is a home office) expert  US Canada Canadian American  Mexican Income Tax  service help.

 email to taxman at centa.com

www.centa.com www.david-ingram.com

pert  US Canada Canadian American  Mexican Income Tax  service and help.

David Ingram gives expert income tax service & immigration help to non-resident Americans & Canadians from New York to California to Mexico  family, estate, income trust trusts Cross border, dual citizen - out of country investments are all handled with competence & authority.

Phone consultations are $450 for 15 minutes to 50 minutes (professional hour). Please note that GST is added if product remains in Canada or is to be returned to Canada or a phone consultation is in Canada. ($472.50 with GST for in person or if you are on the telephone in Canada) expert  US Canada Canadian American  Mexican Income Tax  service and help.

This is not intended to be definitive but in general I am quoting $900 to $3,000 for a dual country tax return.

$900 would be one T4 slip one W2 slip one or two interest slips and you lived in one country only (but were filing both countries) - no self employment or rentals or capital gains - you did not move into or out of the country in this year.

$1,200 would be the same with one rental

$1,300 would be the same with one business no rental

$1,300 would be the minimum with a move in or out of the country. These are complicated because of the back and forth foreign tax credits. - The IRS says a foreign tax credit takes 1 hour and 53 minutes.

$1,600 would be the minimum with a rental or two in the country you do not live in or a rental and a business and foreign tax credits  no move in or out

$1,700 would be for two people with income from two countries

$3,000 would be all of the above and you moved in and out of the country.

This is just a guideline for US / Canadian returns

We will still prepare Canadian only (lives in Canada, no US connection period) with two or three slips and no capital gains, etc. for $200.00 up. However, if you have a stack of 1099, or T3 or T4A or T5 or K1 reporting forms, expect to pay an average of $10.00 each with up to $50.00 for a K1 or T5013 or T5008 or T101 --- Income trusts with amounts in box 42 are an even larger problem and will be more expensive. - i.e. 20 information slips will be at least $350.00

With a Rental for $400, two or three rentals for $550 to $700 (i.e. $150 per rental) First year Rental - plus $250.

A Business for $400 - Rental and business likely $550 to $700

And an American only (lives in the US with no Canadian income or filing period) with about the same things in the same range with a little bit more if there is a state return.

Moving in or out of the country or part year earnings in the US will ALWAYS be $900 and up.

TDF 90-22.1 forms are $50 for the first and $25.00 each after that when part of a tax return.

8891 forms are generally $50.00 to $100.00 each.

18 RRSPs would be $900.00 - (maybe amalgamate a couple)

Capital gains *sales)  are likely $50.00 for the first and $20.00 each after that.

Catch - up returns for the US where we use the Canadian return as a guide for seven years at a time will be from $150 to $600.00 per year depending upon numbers of bank accounts, RRSP's, existence of rental houses, self employment, etc. Note that these returns tend to be informational rather than taxable.  In fact, if there are children involved, we usually get refunds of $1,000 per child per year for 3 years.  We have done several catch-ups where the client has received as much as $6,000 back for an $1,800 bill and one recently with 6 children is resulting in over $12,000 refund.

Email and Faxed information is convenient for the sender but very time consuming and hard to keep track of when they come in multiple files.  As of May 1, 2008, we will charge or be charging a surcharge for information that comes in more than two files.  It can take us a valuable hour or more  to try and put together the file when someone sends 10 emails or 15 attachments, etc. We had one return with over 50 faxes and emails for instance.

This is a guideline not etched in stone.  If you do your own TDF-90 forms, it is to your advantage. However, if we put them in the first year, the computer carries them forward beautifully.