The Justice Department and the Internal Revenue Service (IRS) announced that today Douglas R. Madsen, a former chiropractor from Ephraim, Utah, was sentenced by the U.S. District Judge Clark Waddoups to 33 months in prison and resitutition of over $500,000 following a conviction for attempted evasion of payment of income tax in the District of Utah.
On Jan. 12, 2012, a jury convicted Madsen of one count of tax evasion. According to court documents, Madsen owed approximately $1.3 million in assessed income tax, interest and penalties for the years 1995 and 1999 to 2004. Madsen’s tax debt had grown, by the trial date, to over $1.7 million, after accrued interest.
The evidence presented at trial established that Madsen used nominee trusts to conceal the ownership of numerous acres of property, ultimately causing the transfer of that property to Grand Scale Inc., a Washington state corporation of which he was the president, vice president, secretary, treasurer and chairman of the board. In addition, the evidence showed that Madsen used other entities to encumber property and cloud equity in that property through use of mortgages and Uniform Commercial Code financing statements. Madsen was previously held in civil contempt by the U.S. District Court for the District of Utah for failure to comply with court orders with respect to an IRS summons.
Assistant Attorney General for the Justice Department’s Tax Division Kathryn Keneally commended the efforts of Tax Division Trial Attorneys Jennifer R. Laraia and Leslie A. Goemaat, who prosecuted the case, and special agents of IRS – Criminal Investigation, who investigated the case.