WASHINGTON - Lanny R. White of Orem, Utah pleaded guilty in Salt Lake City federal district court to a felony charge of conspiracy to defraud the United States and to commit mail and wire fraud, in connection with the promotion of a tax and investment fraud scheme, the Justice Department and the Internal Revenue Service (IRS) announced today.
In April 2003, White, David J. Orr, attorneys Todd R. Cannon and Michael Behunin, and Certified Public Accountant (CPA) Max Lloyd were indicted for promoting and selling a fraudulent trust scheme to over 300 clients that defrauded the United States of millions of dollars in tax revenue. Today's guilty plea brings the number of individuals who have pleaded guilty in this case to 11, including four attorneys and one certified public accountant. “People who hold themselves out as licensed professionals and help others evade taxes do more than damage the reputation of honest professionals,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “By defrauding the federal Treasury, they harm all honest taxpayers. The Department of Justice is working vigorously to prosecute these tax fraud promoters.”
According to the plea agreement, White admitted that from 1993 to 2004, he and his co-conspirators—using the names Advanta Strategies, World Contractual Services, Rockwell Services, CornerStone West, Ventures Limited, and Whiven Financial—marketed and sold a fraudulent trust scheme to over 300 clients through seminars, promotional materials, and opinion letters. White 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.
“Those who promote the use of abusive trusts and tax schemes for the purpose of evading taxes harm our system of taxation, harm many of their investors and are engaging in criminal activity,” said Nancy Jardini, IRS Chief, Criminal Investigations. ”We will continue to shut down fraudulent tax schemes and hold the promoters of these schemes accountable for their actions.”
White admitted that, as part of his role in the conspiracy, he falsely claimed to be a licensed CPA and used his brother's CPA license numbers, without his brother's knowledge. White also admitted to preparing opinion letters that falsely assured the legality of the tax benefits of the fraudulent trust scheme and that he promoted the scheme at offshore seminars hosted by the “Institute of Global Prosperity.” Several individuals associated with Global Prosperity have been convicted of felony tax charges in the Western District of Washington. White acknowledged that his actions, which resulted in the filing of more than 2,000 false and fraudulent federal income and trust tax returns, caused a loss of federal tax revenue totaling between $7 million and $10 million.
Additionally, White acknowledged that he and others conspired to use the U.S. mail and interstate wire communications to obtain over $5 million and property from clients through false and fraudulent misrepresentations. White 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, in fact, pay any return.
White faces a potential maximum sentence of five years in prison followed by up to three years of supervised release, a $250,000 fine and liability for the costs of prosecution. U.S. District Judge Ted Stewart scheduled sentencing for February 26, 2007.