Bogus Loss of Income Policy Equals Tax Evasion Indictment
Have you been sold a "Loss of Income Policy" from an offshore captive, with the promise that you could save taxes? Did you cut the check? Did you take the deduction? Did you know that the policy wasn't really real and that you would get most if not all of your money back? If so, you had better talk with an attorney who represents people in criminal tax evasion cases, soon. Very soon.
Press Release
Contact: DONALD A. DAVIS, ASSISTANT U.S. ATTORNEY, PHONE: (616) 456-2404
MICHIGAN ATTORNEY AND CLIENT CHARGED WITH TAX CRIMES ALONGWITH FOUR PROMOTERS OF FRAUDULENT INSURANCE TAX SHELTER
THURSDAY, MARCH 6, 2008- Grand Rapids, Mich. – A federal grand jury sitting in Grand Rapids, Michigan, returned a six-count superseding indictment yesterday, charging a Kalamazoo, Michigan attorney, his client, and four alleged tax shelter promoters with tax crimes. John A. Campbell, 63, of Portage, Michigan, a former partner with the law firm of Miller, Canfield, Paddock & Stone, P.L.C., was charged with one count of conspiracy to defraud the United States for his alleged conduct in helping four shelter promoters sell fraudulent tax shelters over a ten-year period. Campbell’s client, Oskar René Poch, 56, of Hickory Corners, Michigan, who owned and operated Trillium Staffing, an employee-leasing company in Kalamazoo, Michigan, was charged with one count of corruptly endeavoring to obstruct the administration of the Internal Revenue Laws. Finally, two of the four promoters were also charged with the attempted income tax evasion of Poch’s income tax liability for 1999 and 2000, because he purchased the fraudulent tax shelter in those years and deducted the premiums on his tax returns, and the promoters allegedly misled the IRS about those transactions. Poch was not charged in the conspiracy or with tax evasion. Poch has entered into a plea agreement with the government, which was also filed today.
Nathan J. Hochman, Assistant Attorney General for the Tax Division, United States Department of Justice, Charles R. Gross, United States Attorney for the Western District of Michigan, and Maurice M. Aouate, Special Agent in Charge, Criminal Investigation, IRS, Detroit Field Office, announced the superseding indictment today.
The four shelter promoters charged along with Campbell in the conspiracy are from all over the country. The superseding indictment charged that beginning in 1995, Peter J. Peggs, age 73, of Prides Crossing, Massachusetts, Robert Duane Larsen, age 63, of Winter Park, Colorado, and Anthony G. Merlo, age 55, of Fort Worth, Texas and the United States Virgin Islands, were involved in a criminal conspiracy, along with their tax attorney John A.Campbell, and Craig M. Stone, age 63, of Fort Pierce, Florida, that the indictment states joined the conspiracy in 1999, allegedly to defraud the United States by promoting, marketing, selling, and administering fraudulent tax shelters called loss-of-income (“LOI”) insurance policies. These policies were issued through Security Trust Insurance Company, a now-defunct company that was located in the U.S.V.I. which was formerly known as Caduceus Life Insurance Company.
According to the superseding indictment, Peggs, Larsen, and Merlo, who were officers, directors, and owners of Security Trust, and Campbell and Stone, promoted and sold LOI policies to wealthy clients in order to generate false tax deductions, and subsequently returned nearly all of the premiums to the U.S. taxpayer clients in a manner concealed from the IRS. During the duration of the conspiracy, more than $12,000,000 in premiums was collected.
According to the superseding indictment, Poch improperly deducted approximately $3,900,000 in insurance premiums paid by his companies to Security Trust in the years 1999, 2000, and 2001. The false deductions had the effect of reducing Poch’s individual income taxes in each of these years. The superseding indictment further alleges that as part of this scheme, the coconspirators improperly disguised the return of over $3 million to Poch as offshore funds available to Poch in the form of loans. The superseding indictment also charges Peggs and Larsen for their role in the attempted income tax evasion of the taxes owed by Poch for the years 1999 and 2000.
In furtherance of this scheme, the superseding indictment alleges that Peggs, Larsen, and Campbell lied to the IRS during its audit of Poch’s tax returns in 2002 and 2003. In addition, Peggs, Larsen, and Campbell also allegedly made material misrepresentations about the facts underlying this scheme to Poch’s tax court representative who was preparing to contest the IRS audit determination in United States Tax Court. Moreover, Poch was charged separately with providing false, misleading, and incomplete answers to the IRS in a June 2002 interview with the IRS during the audit of his tax returns. The superseding indictment alleges that Peggs and Larsen engaged in similar conduct with other clients and individuals in Massachusetts and Kentucky. One of the named unindicted co-conspirators, Bruce M. Cohen, of Louisville, Kentucky, pleaded guilty in 2007 to conspiracy charges in federal courts in both Ohio and Kentucky for his role in this scheme. Cohen is presently serving a 30 month prison sentence for his Kentucky conduct, and is awaiting sentencing in Ohio.
Conspiracy to impede the IRS and tax evasion each carry maximum punishments of five years’ in prison and a fine of up to $250,000. Corruptly endeavoring to impede the administration of the Internal Revenue Laws carries a maximum punishment of three years’ in prison and a similar fine. Assistant Attorney General Nathan J. Hochman and U.S. Attorney Charles Gross commended the investigative efforts of the IRS agents in the case, as well as Department of Justice Tax Attorneys Richard M. Rolwing and Patrick J. Murray, and Assistant U. S. Attorney Donald A. Davis, who are prosecuting the case.
The charges in the pending indictment are merely accusations, and the defendants are presumed innocent unless and until proven guilty in a court of law.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
Labels: loss of income policy, tax evasion
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