Arizona Attorney and Accountant Sentenced to Prison for Abusive Foreign Trust Scheme
WASHINGTON – Steven W. Allen, a practicing attorney from Mesa, Ariz., and Allen Goodmansen, a certified public accountant, also from Mesa, were sentenced to prison for tax fraud by Phoenix federal district court Judge Roslyn O. Silver, the Justice Department and the Internal Revenue Service (IRS) announced today.
The court sentenced Allen to 46 months in prison and Goodmansen to 18 months in prison. According to court documents, Allen helped his clients evade their taxes by promoting and selling a fraudulent foreign triple-trust scheme. Goodmansen assisted Allen by preparing false foreign trust returns and individual income tax returns for Allen’s clients.
According to court documents, Allen set up three sham foreign trusts designed to conceal his clients’ income and their control of the trusts from the IRS. In fact, his clients never surrendered control of their money, which remained in the United States. Allen instructed his clients to open domestic bank accounts in the names of their trusts, using employer identification numbers that Allen received from the IRS, so that clients’ names and Social Security numbers would not be connected to their money. Allen sold the trust packages for between $10,000 and $30,000 and charged each client additional annual maintenance fees.
To further conceal the clients’ income from the IRS, Goodmansen prepared foreign trust returns that did not include any identifying information that could be used to identify Allen, Goodmansen, or the client. Goodmansen also prepared false individual income tax returns for Allen’s clients, which completely omitted the income that the clients had fraudulently shifted to the false foreign trust returns. Goodmansen used the scheme himself to evade taxes he owed in 2002.
John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division, commended the special agents from IRS Criminal Investigation who investigated the
case as well as Tax Division attorneys Monica Edelstein and Michael Romano who prosecuted the case. Acting Assistant Attorney General DiCicco also thanked the U.S. Attorney’s Office for the District of Arizona for their assistance in this matter.