WASHINGTON, D.C. – The Justice Department today filed a civil injunction suit seeking to bar Frank Eugene Ellena, of Kamiah, Idaho, from marketing alleged tax scams involving sham trusts and corporations. The civil complaint, filed in the U.S. District Court for the District of Idaho, alleges that Ellena, conducting business as Celtic International Paralegal and Financial Services, falsely advises customers that they can use a so-called “corporation sole” or “pure trust” scheme to remove themselves from the federal tax system and avoid paying federal income taxes entirely. The complaint also seeks an order directing Ellena to provide the government with a list of his customers’ names, mailing and e-mail addresses, and telephone and Social Security numbers.
Promoters of sham trusts often falsely promise a variety of benefits, such as the reduction of income subject to tax, deductions for personal expenses paid by the trust and reduction of gift or estate taxes. Corporation sole promoters often claim falsely that an individual who forms a corporation sole is entitled to exemption from federal income taxes as a tax exempt religious organization. More information regarding trust misuse may be found on the IRS website at http://www.irs.gov/
The Department has sought or obtained injunctions against the following corporation sole promoters since January 1, 2005:
Rita I. Johnson of Gig Harbor, WA – http://www.usdoj.gov/tax/txdv05669.htm;
Nancy E. Lloyd of Greenbsoro, NC – http://www.usdoj.gov/tax/txdv05657.htm;
James Kent Lansing of Rockledge, FL – http://www.usdoj.gov/tax/txdv05614.htm;
John and Candace Sinclair of Kirkland, WA – http://www.usdoj.gov/tax/txdv05405.htm; and
Joseph O. Saladino of Palmdale, CA – http://www.usdoj.gov/tax/txdv05030.htm.
According to the suit, Ellena falsely claims to be a “legal counsel” and advises customers to move their assets into a corporation sole, which Ellena falsely claims is automatically tax-exempt. Ellena also allegedly falsely advises customers that they can operate their businesses tax free by using a corporation sole or trust that he creates, while at the same time concealing their income and assets from the IRS. The complaint further states that through the materials he provides, Ellena instructs customers to impede IRS investigations by demanding that IRS agents fill out a “Public Servant Questionnaire.” According to the complaint, Ellena charges amounts ranging from $2,500 to $3,250 to participate in the tax-fraud scheme. The complaint says that the IRS has identified over 400 persons who have bought the program.
This injunction suit is part of an effort to stop the promotion of tax-fraud scams. Since 2001, the Justice Department has sought and obtained injunctions against more than 160 tax scam promoters and preparers of false or fraudulent returns. More information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm. More information about the Tax Division is available at http://www.usdoj.gov/tax/index.html.
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06-155