Winfield Thomas, a resident of Carey, Ohio, and Jeanne Herrington, a resident of Parma, Mich., were sentenced today to prison for conspiracy and other tax charges. The Honorable David A. Katz, U.S. Senior District Judge for the Northern District of Ohio, sentenced Thomas to 30 months in prison and 3 years of supervised release. Herrington was sentenced to 96 months in prison and 3 years of supervised release.
In November 2008, a federal jury convicted Thomas and Herrington of conspiracy to impede the IRS. Herrington was also convicted of corruptly interfering with the administration of the internal revenue laws.
Judge Katz also today sentenced co-conspirator Chad Rickle of Findlay, Ohio, who pleaded guilty to conspiring with Thomas and Herrington, to 4 months in prison, 4 months of home confinement and 3 years of supervised release.
According to the evidence presented at trial, Thomas and Herrington promoted and sold bogus financial instruments which they fraudulently stated could be used to pay tax liabilities of their clients. These fictitious financial instruments, referred to as ‘Bills of Exchange’ and ‘drafts’ by witnesses, purported to be worth thousands of dollars. The total amount of fictitious financial instruments related to the scheme was in excess of $28 million.
According to the evidence presented at trial, Thomas began marketing and selling abusive trusts in northwest Ohio in 1993. He fraudulently promoted these trusts as estate planning vehicles. Thomas instructed trust participants to file false income tax returns that were prepared by co-defendant Chad Rickle which unlawfully assigned personal property and income to the trusts and then illegally deducted personal expenses as fiduciary and other fees. After the IRS sent the trust participants tax deficiency notices, Thomas instructed trust participants to ignore IRS correspondence, resulting in IRS tax assessments and the initiation of collectionactivities. Thomas and trust participants also sent false and threatening documents to the IRS in response to its collection efforts.
According to the evidence presented at trial, after the assessments were made against their clients, Herrington and Thomas promoted a scheme involving the preparation and submission of fictitious financial instruments to the IRS as purported payment of trust participants’ outstanding tax liabilities. Herrington instructed the trust participants to open and then quickly close checking accounts and to use the account and routing numbers for those closed accounts on the bogus ‘drafts.’
Also according to the evidence presented at trial, Herrington submitted false Forms 1099 to the IRS in October 2006, shortly after she was first indicted for tax crimes, in an effort to obstruct the prosecution. These Forms 1099 falsely reported that various individuals associated with the prosecution, including a Tax Division attorney and an Assistant U.S. Attorney in Toledo, Ohio, had received substantial amounts of income from Herrington.
Acting Assistant Attorney General John DiCicco of the Department of Justice’s Tax Division commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jorge Almonte and Sean O’Connell who prosecuted the case.