WASHINGTON – The Justice Department is seeking to block a husband and wife from operating a scheme that allegedly helps high-income individuals attempt to improperly avoid income taxes by funneling money through purported “welfare benefit plans,” the Justice Department announced today. The civil injunction suit was filed in federal court in Chicago against Tracy L. Sunderlage and his wife, Linda Sunderlage, of Huntley, Ill. SRG International, Ltd., of Nevis, West Indies, and three related Illinois companies – SRG International U.S. LLC, Maven U.S. LLC and Randall Administration LLC – were also named as defendants.
According to the complaint, the defendants claim to operate plans that provide benefits like life and health insurance to participating companies’ employees, when in fact the scheme is simply a mechanism for the companies’ owners to receive purportedly tax-free or tax-deferred income for their personal use. Tracy Sunderlage and the two SRG International companies allegedly market the scheme to h igh-income professionals who own small, closely held companies. Tracy Sunderlage allegedly tells scheme participants that their companies’ contributions to these plans are tax-deductible.
In the alleged current version of the scheme, each participant’s company makes supposedly tax-deductible payments to a purported benefit plan operated by Maven and Randall Administration. The company’s contributions are allegedly transferred into an account within an Anguilla company in which they are invested until the owner terminates from the program and receives the assets for his or her personal use. The complaint alleges that many participants own these foreign accounts through offshore trusts, which Tracy Sunderlage and SRG International Ltd. often help to establish.
The complaint alleges that participants from across the country have transferred at least $239 million to the purported welfare benefit plans and that total contributions may exceed $300 million.
Tracy Sunderlage has allegedly been involved with other tax schemes as well. According to the complaint, he has promoted the use of offshore “asset protection” trusts and an offshore “business protection plan.” In addition, the complaint states that he participated in the illegal Aegis trust scheme and promoted it to at least one welfare benefit scheme participant.
The Internal Revenue Service has warned t hat many programs claiming to provide substantial tax deductions through contributions to purported welfare benefit plans are, in fact, abusive tax schemes. In April, a federal judge in Los Angeles permanently enjoined a California man who allegedly promoted sham welfare-benefit plans.
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions against promoters of tax schemes and preparers of fraudulent tax returns. Information about these cases is available on the Justice Department website .