Scams and Tax Evasion
Assistant Attorney General – 2004:
“Moving assets offshore or into bogus trusts to hide them from the IRS is always a bad choice,” said Assistant Attorney General Eileen J. O’Connor. “People who participate in such schemes risk losing their assets to the tax scam promoters and being prosecuted for tax fraud. In the end, they will still owe the taxes, plus interest and possible penalties.”
Chief of Criminal Investigations, IRS – 2004:
“The IRS has made the investigation of abusive schemes a national priority,” said Nancy Jardini, IRS Chief, Criminal Investigation. “Individuals who promote these schemes as well as some of their clients are getting the message that this type of abusive activity will not be tolerated.”
With these quotes, you have been warned. These warnings are meant to be the caveat emptor or “buyers beware” notices that should be no surprise to you if you read our materials. Nonetheless, we will review a true scam operation that was busted, but still continues to operate and conduct business.
Daniel Andersen, a co-founder of Global Prosperity, pled guilty to a felony tax charge of conspiracy to defraud the United States by impeding the Internal Revenue Service (18 U.S.C.§371).
U.S. District Court Judge Thomas S. Zilly set sentencing for October 15, 2004. On May 11, 2004, Mr. Andersen, who resided in Leominster, Massachusetts and Oxnard, California, was indicted -- along with David Struckman, Lorenzo (“Zo”) Lamantia (also known as Lorenzo Milano); Kuldip Singh (also known as Kay Singh and Kay Milano); and Dwayne Robare -- for conspiracy to defraud the United States by impeding the Internal Revenue Service (18 U.S.C. §371).
The indictment alleges that from 1996 until May 2002, the defendants formed and operated “Global Prosperity,” which received more than $50 million from sales of a “home-study” series of “wealth-building” audiotapes and compact discs, sold for $1,250 and tickets to domestic and offshore seminars, sold at prices ranging from $6,250 to $37,000 each. The so-called “wealth building” strategies allegedly included fraudulent methods of income tax elimination, such as placing assets in purported foreign or common law trusts without giving up control of the assets and attempting to remove oneself from the jurisdiction of the United States.
The defendants allegedly concealed income earned from the sale of Global Prosperity products through the use of bogus trusts, nominee entities and related bank accounts that they owned and controlled, including offshore bank accounts into which the defendants deposited portions of their profits.
They allegedly maintained signature authority over the offshore bank accounts and transferred funds back into the United States through wire transfers and debit cards. In a statement of facts submitted to the court, Mr. 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.
Mr. 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 Internal Revenue Service.
Mr. Anderson also admitted that he employed several people in Marlborough, Massachusetts, but did not report their wages to the IRS and did not issue Forms W-2 or Forms 1099. Mr. 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, Mr. Andersen admitted that his actions caused a tax loss of between $2,500,000 and $7,000,000. He has agreed to cooperate fully with the Internal Revenue Service in paying all delinquent taxes, including interest and penalties.
You can find the many details of this scam on the Internet. This report is summarized from the Department of Justice.
OFFSHORE ASSET PROTECTION
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