BY NOLAN CLAY

A pilot who opposed paying taxes on constitutional grounds was sentenced Wednesday to almost three years in prison for seven false tax returns. George Edward Boyd, 60, of Stillwater was ordered to pay $113,053 in restitution to the Internal Revenue Service. He also must pay $4,065 to cover the cost of his prosecution and a $1,400 special assessment to the federal government.

U.S. District Judge Robin Cauthron said she chose the punishment — 33 months in federal prison — to set an example for others. "Clearly you are a good man, better than most,” the judge told the retired U.S. Air Force lieutenant colonel. "Why you did what you did, I cannot fathom.”

A jury convicted Boyd on April 15 of 14 felony counts. Prosecutors said he reported he had no wages on tax returns for 2001 to 2007 even though he had substantial income those years as a pilot for an international cargo company. Prosecutors said he also falsified refund requests on those returns.

After the verdict in April, IRS Agent Michael Lahey said, "Far too often people have followed bad tax advice regarding frivolous tax arguments that have been refuted time and again by the courts.”

Koleske did not attend most of his July trial in federal court in Milwaukee because he claims he is a "posterity citizen of the United States" with "free inhabitant" status and therefore is not subject to federal law.

According to prosecutors, Koleske made hundreds of thousands of dollars on a pyramid scheme but lied about the money to a federal grand jury and failed to report it on his tax returns. Koleske was arrested in January, after being on the run for more than four months.

During his first court appearance, Koleske accused the police of kidnapping him and claimed the government has no authority over him.

The top three payments totaled $270 million with one taxpayer paying over $100 million. "IRS on Thursday said it expects to recover more than $3.5 billion in unpaid taxes from 1,165 taxpayers when it concludes the settlement program over the next few months. Popular during the late 1990s market boom, Son of Boss was a variant of an illegal tax shelter called the Bond and Options Sales Strategy. It created what the IRS called artificial tax losses to offset profit from the sale of a business or other large, one-time gain." About 200 users of Son of Boss were rejected by the settlement program. At least 400 users didn't apply.

According to a Washington Post article, "The Son of BOSS initiative is one of a series of steps the IRS has taken during the past several years to try to rein in the explosive growth in tax shelters that arose during the boom of the late 1990s. That growth also coincided with attacks by the Senate Finance Committee on the IRS for what the panel claimed were abuses of its own. Those hearings were followed by a new law bringing sweeping changes in the structure of the IRS and increased focus on service to taxpayers."

New York Times

The admission last week by the big accounting firm KPMG of "unlawful conduct" in selling tax shelters may help shield the firm from criminal indictment, but it heightens its vulnerability to costly civil litigation. KPMG's acknowledgment, in which it said it "takes full responsibility" and "deeply regrets" tax-shelter abuses, may also undermine some fellow corporate defendants in civil lawsuits, businesses that worked with the accounting firm to sell and operate the tax shelters and that now potentially face hundreds of millions of dollars in claims.

Among those being sued by investors alongside KPMG are the law firm of Sidley Austin Brown & Wood, which provided advice on the shelters to investors; Deutsche Bank; Presidio, a San Francisco investment advisory firm started by former KPMG partners; and the Quellos Group of Seattle, which, operating under the name Quadra Capital Management, helped execute some transactions. Representatives for all the firms either would not comment, did not return calls or could not be reached. With the admission of unlawful conduct, "the firm's willingness to help the government presumably can be used against it in civil actions," said Howard Abrams, a white-collar defense lawyer in Atlanta.

Lawyers for investors who bought questionable shelters were delighted by the admission. "It's stunning," said Gerald Silk, whose New York firm, Bernstein Litowitz Berger & Grossmann, is pressing a lawsuit against KPMG in a state court in Arkansas. The lead plaintiff in the suit, Thomas Becnel of Destin, Fla., was approached by KPMG after he had a big taxable gain in his real estate development business, Silk said, and entered into two shelters later ruled invalid by the IRS.

The Internal Revenue Service is getting powerful new weapons to use in its long-running war on bogus tax shelters. The new weapons come from legislation approved this week by the Senate and expected to be signed into law by President George W. Bush. While some provisions affect primarily businesses, many are aimed squarely at individuals who seek refuge in shelters, loosely defined as transactions with no real business purpose other than dodging taxes. For example, the new legislation includes substantial penalties for failing to disclose certain tax-motivated transactions to the IRS. It also increases the amount of penalties that can be imposed if a tax shelter fails to pass muster. Another provision could mean additional interest charges for many tax-shelter participants. And tax-shelter promoters could face heavier penalties.

“The new laws will significantly increase the cost and decrease the benefit of entering into a tax shelter,” says David Hariton, a tax partner at law firm Sullivan & Cromwell LLP in New York. “It’s more likely that the IRS will discover and challenge your shelter.” Also, “it’s more costly to gamble and lose.” So what’s an individual supposed to do when confronted by a promoter’s mouth-watering sales pitch for a tax shelter? Be especially leery of promoters who say you can’t check out their highly confidential ideas with anyone else. Make sure you get an independent evaluation by a qualified tax expert who isn’t connected in any way with the transaction. And don’t rely on boilerplate opinion letters that promoters will wave at you in an effort to persuade you the transaction is kosher.

“Taxpayers should avoid transactions that purport to produce large deductions or losses to offset the tax on unrelated income and that don’t have meaningful economic consequences,” Hariton said. “These transactions probably don’t work under current law, and they involve risk of substantial penalties. In other words, if it sounds too good to be true, it probably is.” Many people already appear to be heeding Hariton’s advice. “I’d find it difficult to believe anyone is realistically considering a shelter investment presently,” said Charles P. Rettig, a tax lawyer at Hochman, Salkin, Rettig, Toscher & Perez PC in Los Angeles. “The current environment seems to have halted all but the most aggressive individuals.”

The new legislation also increases IRS clout in governing the conduct of tax lawyers, accountants and other tax professionals. For example, the IRS now can impose a monetary penalty as a sanction against wrongdoers. If that person is acting on behalf of an employer or someone else, the Treasury can impose a monetary penalty on the employer or others if they “knew, or reasonably should have known, of the conduct,” according to a congressional report. These monetary penalties can be on top of, or in place of, suspension, disbarment or censure of an individual.

More changes appear likely in coming months. Treasury and IRS officials have been putting the finishing touches on proposed new rules calling for higher ethical standards for tax professionals who practice before the IRS. While the new law contains important provisions, Congress shied away from other proposed changes, including a clarification of what has become known as the “economic substance” doctrine. A congressional report defines this doctrine as one that generally denies tax benefits stemming from “transactions that do not result in a meaningful change to the tax payer’s economic position other than a purported reduction in federal income tax.” A Senate-approved provision died in a House-Senate conference. Critics argued the Senate version was so broadly worded that it would jeopardize legitimate business transactions.

It has not been a good week for tax protesters in California. On Monday, John Zentmyer, formerly of Tustin, was sentenced to 33 months in federal prison for failing to pay income taxes on money he earned from the sale of an automotive-products company. Zentmyer, 62, was convicted in November after arguing that he wasn’t guilty of tax evasion because he sincerely believed that he should not have to pay income taxes, prosecutors said. Last Friday, a Sacramento businessman who stopped withholding taxes from his employees’ paychecks was convicted of all but one of 14 federal charges. Al Thompson, 58, had become a hero to the tax-denier movement, as assortment of groups that assert that Americans are tricked into paying income taxes.

Zentmyer, who served as his own attorney for part of his trial, argued that his review of old Supreme Court cases had led him to conclude that paying income taxes isn’t required. The argument is typical of those who deny the authority of the government to collect taxes, said Gary Tang, a spokesman for the Internal Revenue Service. Others have claimed that the amendment to the U.S. Constitution that authorizes the income tax was not properly enacted, or that they don’t recognize the U.S. government as legitimate, Tang said.

The IRS has posted a 54-page refutation of such claims, titled “The Truth About Frivolous Tax Arguments,” on its Web site. Zentmyer was convicted of loan fraud for submitting a false employment letter in connection with a loan application to purchase a house in Tustin. At trial, Zentmyer claimed his religious beliefs preventing him from divulging his Social Security number to the bank. He testified that he believed the number was “the mark of the beast,” or devil, because it contains three sixes, Tang said. Neither Zentmyer nor an attorney who advised him could be reached for comment Tuesday. Zentmyer, who is now a resident of La Mesa, was ordered by a Los Angeles federal judge to begin serving his prison term on March 28.

In the 92 years since the federal income tax was enacted, tax deniers have never won a case. However, their ranks are believed to be growing, as claims that tax laws are illegitimate are spread by Internet sites.

One such site operated by a Fountain Valley man was effectively shut down after a federal judge in December ordered him to stop running an alleged scheme to help hide tax-delinquents’ assets from the IRS. Visitors to Anthony Hargis’ Web site, www.anthonyhargis.com, now see a copy of the order signed by Judge David O. Carter of U.S. District Court in Santa Ana, as well as other documents from the government’s lawsuit against Hargis. Hargis’ attorney, Sean Perez, said in December that Hargis was homeless and destitute after the government seized his assets.

More Orange County residents are scheduled to face prosecution after publicly challenging the constitutionality of income-tax laws. George “Nick” Jesson and his wife were charged with tax evasion in 2003 after allegedly failing to pay taxes on more than $3 million of income between 1997 and 1999. Jesson ran for governor in 2002 on an anti-income-tax platform.

The owner of No Time Delay Electronics in Huntington Beach, Jesson appeared on television and radio and in newspaper ads nationwide to state his belief that income taxes are a fraudulent government scheme. In 2001, state tax authorities responded by raiding his house and offices, confiscating computers and financial records. The Jessons are scheduled to stand trial in Orange County Superior Court on May 9.

In a separate case, Richard Engel, owner of Powerplant Maintenance Specialists Inc. in Costa Mesa, and his ex-wife, Jolene Engel, face allegations that they didn’t report $190 million in earnings over four years.

With the help of the Bank of America they used Isle of Man accounts (island near England which is a traditional non reporting country used for international accounts) to shelter $100,000,000 from U.S. taxes.

It used to be legal to donate money to trusts that the donor did not control for a tax write off but the IRS banned that practice in 2003. Even so, authorities beleive that the Wylys's DID retain control of the Trusts and therefore the 'donated' money.

Now BOTH the Bank of American and the Wylys Brothers are being investigated along with 42 other (and unnamed) corporations, plus dozens of individual for using the trust to hide income and avoid paying taxes.

Keep all of this in mind the next time someone pitches you an overseas 'Trust' that will help you avoid paying taxes.

If billionaires and banks get in trouble, what chance do the 'average' person have?

A federal jury has acquitted a former San Jose Internal Revenue Service special agent of helping to prepare false tax returns. Joseph Banister, 42, whose Web site proclaims, "The Income Tax Is a Hoax, " was found not guilty Thursday of conspiracy and three counts of assisting the filing of false tax returns after a weeklong trial in the courtroom of U.S. District Judge William Shubb in Sacramento.

Banister has advised clients they don't have to file income tax returns on the grounds that the 16th Amendment, which gives the federal government the power to collect income taxes, was not properly ratified. He maintains that only foreign-sourced income is taxable.

Banister, a certified public accountant, resigned from the IRS in 1999 because he felt that he was breaking the law by investigating alleged scofflaw taxpayers. Banister could not be reached to comment. Robert Barnes, a Milwaukee attorney who represented Banister, said, "Speaking out against governmental misconduct is not a crime. It's called being a good American. And that's exactly who Joe Banister is -- a good and honest American." The Internal Revenue Service declined comment on the acquittal.

Banister and a co-defendant, Walter A. Thompson, 58, a noted tax protester from Redding, had been indicted last year on charges of conspiring to defraud the United States of nearly $260,000 in income and employment taxes from July 2000 to December 2002.

Thompson, who owned Cencal Sales, an aviation travel-bag manufacturing business in Shasta Lake City (Shasta County), was acquitted of conspiracy but convicted of 13 tax charges. Thompson was sentenced in April to six years in prison.

Banister was acquitted of helping Thompson file false tax returns. But the California Board of Accountancy is still seeking to revoke or suspend Banister's CPA credentials, and an administrative law judge has also disbarred Banister from practicing before the IRS.

The government’s complaint alleged that Magalhaes and his businesses-Asset Accumulation, Inc.; Pinnacle Wealth Group, L.L.C.; Strategic Ventures, Inc.; and Pinnacle Wealth Concepts, Ltd.-sold plans that Magalhaes falsely claimed qualified as voluntary employees’ beneficiary association (VEBA) plans. If VEBA plans meet certain requirements, employers may deduct contributions they make to the plans to fund certain benefits for their employees. The government alleged that Magalhaes's plans failed to meet those requirements. The suit alleged, the plans were abusive tax schemes designed to enable employers to deduct non-deductible deferred compensation for select high-level employees. According to the government’s complaint, the plans accomplished this by disguising the deferred compensation as employee benefits.

According to the complaint, the IRS has identified more than 100 employers across the country that have participated in Magalhaes’s plans, costing the Treasury an estimated $6.7 million from 1996 through 2001.

WASHINGTON, D.C. - The U.S. Department of Justice announced today that an Ohio federal judge has barred Cincinnati resident Dana C. Ewell from selling tax-fraud products, including products known as the Liberty Pure Trust, the Liberty Product Series, the Liberty Action Pack, and the Liberty Redemption Pack. The civil injunction order, entered by Judge Michael H. Watson of the U.S. District Court for the Southern District of Ohio, also bars Ewell and his organization, !Solutions! Group, from making false statements about the tax laws in connection with organizing or selling any tax plan. Court filings allege that Ewell sold sham-trust or related schemes over the telephone and on the Internet to some 325 customers in 42 states, Guam, and the District of Columbia. The government’s complaint alleged that Ewell charged customers from $525 to $995 for the initial product and charged additional amounts for additional trusts.

“The Justice Department and the Internal Revenue Service (IRS) are working diligently to stop the promotion of tax fraud,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. She thanked Justice Department trial attorney Hilarie E. Snyder and IRS revenue agent Steve Rowe for their work on the case. Misuse of trusts tops the IRS’s 2005 list of the “Dirty Dozen” tax schemes, which can be viewed at . This suit is part of an ongoing Justice Department and IRS initiative to stop the promotion of tax fraud. More information on the case is available at . Information about other tax injunction cases can be found at , and more information about the Justice Department’s Tax Division is available at http://www.usdoj.gov/tax/index.html .

The government’s complaint alleges that Kotmair, Save-a-Patriot, and National Workers Rights Committee (a division of Save-a-Patriot) falsely advise their customers-whom they charge upwards of $99 a year-that they are not required to pay federal taxes or file federal tax returns. Such arguments repeatedly have been rejected by courts across the country. The government alleges that they offer to prepare and file bankruptcy petitions and other court papers for customers in order to obstruct IRS law-enforcement efforts. In addition, the suit claims that Kotmair and Save-a-Patriot encourage and help members to violate tax laws by offering “insurance-like protection” for customers whose conduct results in tax-collection efforts or criminal convictions.

“People who sell tax scams enrich themselves at the expense of their customers and law-abiding Americans who pay taxes,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Justice Department and the Internal Revenue Service are working vigorously to stop the promotion of tax fraud.”

WASHINGTON, D.C. - The Justice Department announced today that a federal court in Las Vegas has barred five Nevada men linked to a defunct telemarketing firm-the Las Vegas-based National Audit Defense Network (NADN)-from selling tax fraud schemes and preparing income tax returns for others. The court barred NADN’s former president, Weston Coolidge, of Las Vegas; its former general manager, Alan Rodrigues of Henderson; and Lee Panelli, Jeff Klingenberg, and Ric Klingenberg, all Las Vegas residents. The court also enjoined a related company, ALR, Inc., doing business as Success Matrix Group, from committing the same conduct.

Under a previously-issued court order, the government obtained from NADN the names of tens of thousands of NADN customers, including their mailing and e-mail addresses, Social Security or employer identification numbers, and telephone numbers.

NADN allegedly marketed a tax-fraud scam in which victims falsely were told they could claim a tax credit under the Americans with Disabilities Act (ADA) by purchasing websites and then modifying them to comply with the ADA. The government’s court filings estimated that customers using NADN’s tax schemes, including the ADA-credit scheme, cost the federal treasury $324 million over a three-year period.

“The Justice Department and the Internal Revenue Service are committed to stopping tax fraud,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. She thanked Tax Division trial attorneys Evan J. Davis, Phyllis Jo Gervasio, and Karen G. Gregory; Tax Division paralegal Marion Goyette; and IRS revenue agents Sue Cutler and David Gordon for their work on the case.

The only remaining defendant in the suit is former NADN manager Adam Mangabang, against whom a preliminary injunction remains in force.

WASHINGTON, D.C.-Eileen J. O’Connor, Assistant Attorney General for the U.S. Department of Justice’s Tax Division; John L. McKay, U.S. Attorney for the Western District of Washington; and Mark W. Everson, Internal Revenue Service (IRS) Commissioner, announced today that Chief U.S. District Court Judge John C. Coughenour sentenced Anderson Ark defendants Keith E. Anderson, Wayne Anderson, Richard Marks, and Karolyn Grosnickle to terms of imprisonment ranging from eight to 20 years. The defendants received the following sentences:

·Keith Anderson, age 62, a former resident of Hoodsport, Washington, was sentenced to 20 years imprisonment, to be followed by three years supervised release and a $63,525,860 fine;

·Wayne Anderson, age 64, a resident of Fresno, California, was sentenced to 15 years imprisonment, to be followed by three years supervised release, a $25,000 fine, and ordered to pay restitution of $63,525,860;

·Richard Marks, age 60, an accountant from Los Osos, California, was sentenced to 15 years imprisonment, to be followed by three years supervised release and a $42,311,742 fine;

·Karolyn Grosnickle, age 62, formerly from Hoodsport, Washington, was sentenced to eight years imprisonment, to be followed by three years supervised release and a $42,311,742 fine.

Each of the defendants was also ordered to pay costs of prosecution in the amount of $66,288. In addition, the Court ordered forfeited seven properties located in Costa Rica, the AAA Administrative Office in Hoodsport, WA and $28 million in laundered funds.

On December 27, 2004, after seven weeks of trial, those defendants and two other persons associated with Anderson’s Ark and Associates (AAA), were convicted in connection with one of the most far ranging tax schemes ever prosecuted. With administrative offices in Hoodsport, Washington, the organization spanned five countries and over 1,500 clients. The Andersons, Mr. Marks, and Ms. 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.

“People who develop and use schemes to hide income and assets from the IRS should expect to spend a substantial amount of time in prison and also to pay civil penalties and interest in addition to any unpaid taxes,” said Assistant Attorney General O’Connor.

“The activities Mr. Anderson and his co-conspirators were involved in were blatantly illegal and they are being appropriately held accountable for these crimes,” said IRS Commissioner Mark W. Everson. "People who are inclined to participate in schemes like those promoted by Mr. Anderson should know we are rebuilding our enforcement efforts and we are increasingly likely to catch them."

The evidence introduced at trial established that, 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. The two predominant plans were called the “Look Back” and the “Look Forward” programs. The evidence showed that through the Look Back program, the defendants assisted AAA clients in taking $120 million in false income tax deductions for advertising expenses associated with AAA’s “Tax Magic” project.

The evidence revealed that the defendants charged AAA clients anywhere between $50,000 to $250,000 each to buy into the Look Back Program. AAA members were instructed to take out a loan from La Maquina Blanca a Costa Rican lender. According to the trial evidence, La Maquina Blanca was merely a Costa Rican bank account used by AAA.

Although the funds borrowed from La Maquina Blanca were purportedly to be invested with another AAA entity, Mason Advertising, the evidence at trial established that the loans were illusory. Instead, AAA simply transferred millions of dollars between an account at Costa Rican banks to create the appearance that these loans were actually being funded.

Accordingly, the tax deductions arising from these loans were false.

Evidence introduced at trial established that in the Look Forward program, client funds that were moved to foreign bank accounts and falsely deducted on their income tax returns as consulting or management expenses. To make the deductions appear to be legitimate, clients were instructed to send money (through an AAA partnership) to a shell company called “Sawtooth,” which had bank accounts in Nevada and Arizona. Sawtooth was operated by defendant Richard Marks, who transferred the funds to Austrian accounts operated by defendant Wayne Anderson. Ultimately, the money was wired to Costa Rican bank accounts, where it could be withdrawn by clients through the use of international Visa debit cards or wire transfers (handled by AAA personnel in Costa Rica).

In total, over $11 million in income evaded taxation in this manner, according to evidence introduced during the trial.

Defendants Keith Anderson, Wayne Anderson, Richard Marks, and Karolyn Grosnickle were also convicted on charges of conspiracy to commit wire and mail fraud, and 19 counts of wire and mail fraud for defrauding clients out of over $7 million in fees for the non-existent loans associated with the AAA Look Back program. According to the trial evidence, clients were told that these fees were necessary to process the non-existent investment loans. Once deposited in AAA accounts in Costa Rica, the defendants split the money by transferring it to bank accounts at the Bank of Montreal in Canada and the Riga Bank in Latvia.

Defendant Keith Anderson was also convicted of defrauding AAA clients out of an additional $21 million in an investment program he called “Loan 4.” Loan 4 was represented to be a short term lending investment being operated by Charles McCormick of New Jersey. At trial, Mr. McCormick, who had been previously convicted by New Jersey state authorities, testified that the Loan 4 program was nothing more than a pyramid scheme he operated in conjunction with the defendant Keith Anderson.

Finally, defendants Keith and Wayne Anderson were convicted of international money laundering. From 1996 through early 2001, the Andersons sent money collected in domestic AAA accounts to the La Maquina Blanca account, in Costa Rica, to promote AAA tax shelters.

Two remaining Anderson Ark defendants, James Moran and Pamela Moran, are scheduled to be sentenced April 26, 2005. Defendant Richard Grosnickle pleaded guilty to a charge of obstruction of justice on April 13, 2005, and is also awaiting sentencing.

Assistant Attorney General O’Connor and U.S. Attorney John L. McKay thanked Tax Division Trial Attorneys Corey J. Smith, Krista Tongring, and M. Kendall Day, who prosecuted the case. They also thanked the special agents of the IRS, whose assistance was essential to the successful investigation and prosecution of the case.

Additional information about tax fraud schemes to watch out for may be found on the IRS Criminal Investigation website . Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax .

TWO MORE DEFENDANTS SENTENCED IN ANDERSON’S ARK AND ASSOCIATES INTERNATIONAL TAX SHELTER CASE

WASHINGTON D.C. - U.S. District Court Judge John C. Coughenour sentenced Anderson’s Ark and Associates (AAA) defendants James Moran, age 57, and Pamela Moran, age 53, both residents of Montrose, Colorado, to seven years imprisonment, to be followed by three years supervised release, and ordered them to pay restitution of $42,311,742.

The defendants were ordered to pay costs of prosecution totaling $66,488. The court also ordered the Morans to forfeit $850,863 in proceeds they earned from AAA, as well as their Montrose, Colorado home, and their Jeep Cherokee automobile.

WASHINGTON D.C.-Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division; William J. Leone, U.S. Attorney for the District of Colorado; and Nancy Jardini, Chief, Internal Revenue Service (IRS) Criminal Investigation Division, today announced that following a nine-week trial, a federal jury in Denver, Colorado convicted Paul D. Harris and Lester R. Rutherford 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.

“This is one of many pending criminal prosecutions involving the use of foreign bank accounts, trusts and other schemes to hide income from the IRS,” said Assistant Attorney General O’Connor. “Promoting fraudulent tax schemes is a ticket to federal prison.”

“Individuals who promote and participate in abusive trust schemes in order to hide the true ownership of assets and income will be held accountable and punished for their crimes,” said Nancy Jardini, Chief, IRS Criminal Investigation Division. “The IRS is committed to maintaining public confidence in the fairness of tax laws.”

In November, 2002, Harris and Retherford, residents of Colorado, together with Bedford, a resident of Florida, were charged with conspiring to defraud the United States. In addition, Harris and Retherford were charged with 26 counts of aiding and assisting the filing of false income tax returns for the years 1996 through 1999.

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 Tower 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.

On June 28, 2002, in Massachusetts, John Mikutowicz, a Tower member, was convicted on charges of conspiracy, tax evasion and filing false corporate tax returns and was sentenced to a term of imprisonment.