Monday, April 29, 2024

Grand Jury Adds 4 More Indictments In Alleged Abusive Trust Tax Scheme

On January30th 2024 we posted Two Men Indicted On Charges Of Peddling Abusive Trusts, where we discussed that two men promoted and sold abusive tax shelters for the last six years by instructing their clients to use sham trusts to hide business income and illegally deduct personal expenses such as family weddings, according to an indictment in a Colorado federal court in the case of U.S. v. Conner et al., case number 1:23-cr-00390, in the U.S. District Court for the District of Colorado.

Larry Conner, who operated The Business Solutions Group from his home in Frisco, Texas, and Timothy McPhee, who operated Private Banking Concepts from his home in Estes Park, Colorado, told their clients the trust arrangement was legal, according to the indictment, unsealed On September 25, 2023.

The pair were charged with conspiring to defraud the government and multiple counts of helping clients prepare false tax returns. McPhee and his wife, Marcia Predmore, were also charged with evading their own federal income taxes by employing the abusive trust structure that McPhee is accused of promoting. 

Now According to Law360, a federal grand jury in Denver indicted four more people in connection with what prosecutors call a conspiracy to defraud the government in a multistate scheme to promote abusive tax shelters using sham trusts to hide business income and illegally deduct personal expenses such as family weddings.

According to a superseding indictment on April 24, 2024, one of those newly indicted, Roderick A. Prescott of California and Nevada, had agreed in 2003 to a permanent injunction barring him from promoting the so-called family or business trusts. In his role in the new scheme, for which Larry Conner of Texas and Timothy McPhee of Colorado were first indicted in September, Prescott used an alias to hide his injunction from clients, according to the new indictment.

Two others accused Suzanne Thompson of Montana and Weldon Wulstein of Nevada, ran bookkeeping and tax preparation businesses that helped the scheme's clients prepare false returns, assuring the clients that the shelters were legal ways to reduce tax liabilities, according to the indictment.

The fourth in the ring to be newly indicted is McPhee's wife, Marcia Predmore, who was accused in the original indictment of evading $2 million in federal income taxes with her husband by employing the abusive trust structure that he was accused of promoting.

All Four Were Charged With Conspiracy To Defraud
The U.S. And Helping Prepare False Tax Returns.

The indictment accused Prescott, Thompson and Wulstein of helping promote the scheme at seminars and workshops across the country, overseas and online. At some of those seminars Prescott taught about creating a "private family foundation" that was advertised as the last step in the shelter. He also directed clients to wire fees to the promoters' bank account, prosecutors said.

Thompson, who owned a bookkeeping service called The CFO Agency with offices in Montana and Wyoming, and Wulstein, who ran Wulstein Financial Services offering tax preparation from offices in Nevada and California, marketed their accounting and tax services at the seminars, according to court documents.

Predmore and McPhee additionally taught about the shelters under the name of a business they co-owned and ran out of their home in Colorado called Private Banking Concepts, the filings said.

Clients of the scheme were instructed to pay for personal expenses, including mortgage payments, dining costs and weddings, with money held in the trusts, prosecutors said. They were also told to direct assets including real estate and vehicles to the trusts to avoid the appearance of ownership and to avoid paying income taxes on capital gains from selling the assets.

The fraudulent federal tax filings cost the government tens of millions of dollars in tax losses, the indictment said.

Each defendant faces a maximum prison sentence of five (5) years for conspiracy to defraud the U.S. Conner, McPhee, Thompson and Wulstein additionally face up to three (3) years in prison for each count of assisting in the preparation of a false tax return. McPhee and Predmore face up to five (5) years in prison for each count of tax evasion.

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