Monday, August 30, 2004
The Missouri Court of Appeals has found that anyone involved in a series of fraudulent transfers can be sued for civil conspiracy. A word to the wise, for those in other jurisdictions.
SYNOPSIS
The Missouri Court of Appeals, has found that everyone involved in a series of fraudulent transfers can be sued for civil conspiracy. Which should be a warning sign in other jurisdictions. In this case, a judgment debtor physician, attempts to avoid a judgment on a partnership agreement. The physician attempts to avoid judgment by earning professional fees in two companies owned by his wife. The trial court found that since there was no "transfer" per se, there can be no claim of civil conspiracy. However, the Missouri Court of Appeals disagreed, stating that the defendant's used the wife's coporations, to in fact fraudulently transfer income the debtor received from his professional services.
http://www.assetprotectionbook.com/forum/viewtopic.php?p=2279#2279
posted by Alex
@ 8/30/2004 03:12:00 PM
Thursday, August 26, 2004
So-called "Impossibility Defense" fails again in Bahamas FAPT case
Eulich v. U.S., (N.D.Tex. Case No. 99-CV-01842, August 18, 2004), involved a Bahamas offshore trust that was created a by a U.S. Settlor who later was investigated by the IRS. When the IRS served a formal request for documents from the trust, the Settlor refused to provide the documents and claimed that he had no control over the trust and had exhausted his powers to try to get the documents. The District Court disagreed, holding that the Settlor could still attempt to get the documents from the trust by appointing new administrators and by filing a lawsuit in the Bahamas. At any rate, the Court stated, it was not going to recognize the Settlor's "impossibility defense" because the impossibility was self-created, i.e., the Settlor's own drafting caused the impossibility. The Court found the Settlor in contempt and imposed a fine of $5,000 per day on the Settlor, to be increased to $10,000 per day after 30 days, and then after 45 days the Court would consider incarcerating the Settlor until the documents appeared.
The Opinion and more actual case documents at
http://assetprotectiontheory.com/tx_eulich_v_us_2004.htm
posted by Jay
@ 8/26/2004 07:35:00 PM
Wednesday, August 25, 2004
posted by Alex
@ 8/25/2004 03:00:00 PM
I have warned for years about the probable illegality of protecting assets against the IRS. The following DOJ press release exemplifies that peril.
__________________
FOR IMMEDIATE RELEASE
August 13, 2004
DENVER ATTORNEY INDICTED FOR CONSPIRACY TO DEFRAUD THE UNITED STATES AND TAX EVASION
DENVER - John Suthers, United States Attorney for the District of Colorado, and Terry L. Stuart, Special Agent In Charge of the IRS-Criminal Investigation, Denver Field Office, announced that a federal grand jury in Denver, Colorado yesterday returned an Indictment charging MICHAEL JAY SHIDLER, age 50, of Denver, Colorado, with conspiracy to defraud the United States and tax evasion.
According to the indictment, MICHAEL SHIDLER was an attorney licensed to practice law in the State of Colorado. His practice was primarily in tax return preparation and advice, as well as assistance and representation to clients concerning tax-related matters. One of SHIDLER's clients was DONALD MACK, who founded and became president, CEO and principal shareholder of a public company known as Comtec International, Inc., a New Mexico corporation whose intended business was the development of telecommunications services and products.
According to the indictment, in December 1994, MACK (who was previously indicted by a federal grand jury in Denver on similar criminal tax evasion charges relating to the conspiracy, and whose case is currently pending) was assessed a penalty of approximately $124,031 by the IRS based on the failure of a prior public company with which MACK was involved to account for and pay federal payroll taxes. In January 1996, after MACK unsuccessfully appealed the IRS decision, the IRS served a notice of levy upon a bank where MACK had an account, thereby beginning the process of levying against his assets and property.
The indictment indicates that, beginning in or about November 1996, in response to this penalty, SHIDLER and MACK entered into a plan to conceal and remove assets, property, and income from the reach of the Internal Revenue Service and MACK's other potential creditors, through (1) forming and using multiple and interlocking trusts and domestic and offshore shell companies nominally controlled by other individuals; (2) converting MACK's income into cash; (3) transferring cash and stock to domestic offshore accounts held in the names of the domestic and offshore shell companies and trusts; and (4) then repatriating and transferring the assets back into the United States through the acquisition of real estate properties in Parker, Colorado, held in the names of nominees and domestic shell companies and through "loans" extended to MACK by and through such entities.
The indictment focuses on two particular real estate transactions which were completed as part of the plan - the purchase of residential property in Parker, Colorado in the name of MACK's then-spouse; and the purchase of a 40-acre ranch in Parker, Colorado through a nominee individual and one of the shell companies allegedly formed by SHIDLER. The indictment alleges that MACK and SHIDLER used off-shore accounts to facilitate these transactions.
"Attorneys and accountants should be pillars of our system of taxation, not the architects of tax fraud," said Terry L. Stuart, Special Agent In Charge of the IRS-Criminal Investigation, Denver Field Office.
If convicted, SHIDLER faces not more than 5 years in federal prison and/or a $250,000 fine for one count of conspiracy to defraud the United States and for one count of tax evasion.
The case was investigated by the IRS-Criminal Investigations. The case is being prosecuted by Assistant United States Attorney Ken Harmon.
The charges are only allegations and the defendants are presumed innocent unless and until proven guilty.
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Source:
http://www.usdoj.gov/usao/co/0813b04Frame1Source1.htm
