WASHINGTON—R. Scot Stokes, of Henderson, Nevada, was sentenced to 54 months in prison for conspiring to defraud the United States and conspiring to commit mail and wire fraud, in connection with the promotion of a tax and investment fraud scheme, the Department of Justice and the Internal Revenue Service (IRS) announced today. U.S. District Judge Ted Stewart also ordered Stokes to serve 3 years of supervised release upon the completion of his term of imprisonment. In February 2005, Stokes pleaded guilty to the conspiracy and admitted that he and his co-conspirators’ actions caused the filing of more than 2,000 false and fraudulent federal income and trust tax returns and a loss of federal tax revenue of between $7 million and $10 million. In addition, Stokes admitted participating in fraudulent investment schemes that caused customers to lose between $2.5 million and $5 million. Stokes is one of eleven individuals who have pleaded guilty in this case, including four attorneys and one certified public accountant.
“People who promote tax fraud are cheating all law-abiding taxpayers,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Department of Justice is determined to root out tax fraud schemes and prosecute those who promote and use them.” “The government will not tolerate tax schemes that promote the use of abusive trust arrangements to evade taxes,” said Nancy Jardini, IRS Chief, Criminal Investigation. “Public confidence in our system of taxation is vital; therefore, we will continue our enforcement efforts to halt fraudulent tax schemes and hold the promoters of these schemes accountable for their actions.” According to papers filed with the court, Stokes admitted that from 1994 to 2004, he and his conspirators—using the names Advanta Strategies, World Contractual Services, and CornerStone West—marketed and sold a fraudulent trust scheme to over 300 clients through domestic and offshore seminars, promotional materials, and opinion letters. Stokes and his co-conspirators falsely represented to clients that by placing their businesses and assets into the names of trusts, the clients could lawfully eliminate or substantially reduce their income tax liabilities.
Stokes also admitted to placing clients’ assets in unsound “investments” in international financial markets and other offshore “investing opportunities” that he knew would put the clients’ funds at considerable risk and would never pay any return.
Assistant Attorney General O’Connor and Acting U.S. Attorney Stephen J. Sorenson thanked Tax Division trial attorneys Nicholas D. Dickinson and Lea A. Carlisle who prosecuted the case. They also thanked the special agents of the IRS and Federal Bureau of Investigation whose assistance was essential to the successful investigation and prosecution of the case.
More information about the Justice Department’s efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/index.html