WASHINGTON— Five persons associated with Innovative Financial Consultants (IFC) were sentenced to lengthy prison terms for promoting a tax evasion scheme using so-called "pure trust organizations," the Justice Department and Internal Revenue Service (IRS) announced today. U.S. District Judge Mary Murguia found the tax fraud scheme caused, at a minimum, a loss to the federal Treasury of between three to seven million dollars and ordered the following sentences:
Dennis Poseley, a former resident of Phoenix, Ariz. and co-founder of IFC, was sentenced to 84 months of imprisonment and fined $175,000 after being convicted on charges of conspiracy to defraud the government and willful failure to file tax returns;
Patricia Ensign, a former resident of Phoenix, Ariz. and co-founder of IFC, was sentenced to 18 months of imprisonment and fined $100,000 after being convicted on charges of willful failure to file tax returns;
David Trepas, a former resident of Scottsdale, Ariz. and consultant for IFC, was sentenced to 60 months of imprisonment after being convicted on charges of conspiracy to defraud the government and willful failure to file tax returns;
Rachel McElhinney, a resident of Scottsdale, Ariz. and consultant for IFC, was sentenced to 16 months of imprisonment after being convicted on charges of willful failure to file tax returns;
Keith Priest, a former resident of Tempe, Arizona and a "trustee" for IFC, was sentenced to 18 months of imprisonment after being convicted on charges of willful failure to file tax returns.
“People who promote tax evasion schemes will be prosecuted, convicted and sentenced to substantial prison terms,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Department of Justice is working vigorously to stop tax scammers who harm the federal Treasury and all honest taxpayers.”
“Promoting abusive trusts and tax schemes for the purpose of committing tax evasion isn’t tax planning; it’s criminal activity,” said Nancy Jardini, Chief of IRS Criminal Investigations. “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.”
On Sept. 8, 2005, after a six-week trial, a jury convicted the defendants of tax crimes in connection with their promotion of a tax evasion scheme through IFC, a consulting company based in Tempe, Ariz. The defendants advanced their scheme through several avenues, including domestic and offshore seminars, a promotional website, and an interactive telephone conference line.
According to evidence the government presented at trial, from 1996 through early 2003, the defendants received $4.7 million in fees from their sale of 2,000 "pure trusts," falsely claiming that their customers could lawfully avoid income taxes by placing their income and assets into a trust. Evidence introduced at trial showed that IFC's trusts enabled customers to retain the use and control of any income and assets they placed into their respective trusts, while making it difficult for the IRS to track the true ownership of assets or income assigned to the "trusts." Trial evidence also showed that IFC was a prominent vendor with the “Institute of Global Prosperity” (IGP). At offshore seminars hosted by IGP, defendant Dennis Poseley promoted IFC's trust schemes to thousands of people.
Assistant Attorney General O’Connor thanked Tax Division trial attorneys Larry J. Wszalek and Mark T. Odulio who prosecuted the case. She also thanked the special agents of the Internal Revenue Service 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.