WASHINGTON – An Oregon federal court has permanently barred John Fitzgerald of Portland and his three daughters—Marilyn Dial, Martha Farr Sharp and Karen Gray—from marketing a tax fraud scheme involving sham nonprofit corporations that customers used to evade federal taxes, the Justice Department announced today. The civil injunction order also bars Noreen McCausland, a family associate, from promoting the scheme.
Judge Michael W. Mosman of the U.S. District Court for the District of Oregon found that the defendants, through their business American Family Enterprise, Inc., operated “a one stop shop” for setting up sham nonprofit corporations in Oregon. The defendants falsely told customers they could put their income, assets and businesses into the sham corporations and would not have to file income tax returns or pay taxes.
The defendants also promised customers that their names would not be used in establishing the corporations and that the corporations could be considered nonprofit without having to obtain Internal Revenue Service (IRS) approval for nonprofit status. In fact the IRS must approve a corporation’s request to have nonprofit status. The court found that at least 676 customers used the sham nonprofit scheme to improperly reduce their reported income taxes.
The court order requires the defendants to notify their customers of the injunction and to give the Justice Department a list of their customers’ names, addresses, phone numbers and Social Security numbers.
“Promoters who claim they can magically make taxes disappear or prevent the IRS from learning about customers’ transactions are nothing more than con artists,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division. “The IRS and Justice Department are committed to bring to justice both tax fraud promoters and those who buy their schemes.”
Since 2001, the Justice Department has obtained more than 330 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent tax returns. More information about the Justice Department’s efforts against tax-scam promoters is available on the Justice Department’s website, as information about the Justice Department’s Tax Division.