FOR IMMEDIATE RELEASE|
TUESDAY, SEPTEMBER 30, 2003
TDD (202) 514-1888
JUSTICE DEPARTMENT FILES SUIT TO STOP
WASHINGTON, D.C. - The Justice Department today announced that it has filed two lawsuits to stop two California individuals from promoting sham trusts and other schemes to illegally reduce the reported federal tax liabilities of their customers. The complaints, filed in U.S. District for the Central District of California, also seek to bar the men - James Mattatall and Arne Ristol - from preparing federal income tax returns for clients.
The complaint alleges that Mattatall, a registered tax preparer with the California Tax Education Council, and Ristol, owner and operator of Kismet Trust, illegally advised their clients conceal income and assets from the Internal Revenue Service in sham trusts and to claim improper tax deductions. The lawsuits also charge that the defendants allegedly prepared fraudulent tax returns that have cost the federal government millions of dollars in lost tax revenue. There is no alleged connection between the two men.
“The Justice Department is taking all available steps to stop the promotion of tax evasion scams and the preparation of fraudulent federal tax returns,” said Eileen J. O'Connor, Assistant Attorney General for the Justice Department’s Tax Division. “People who try to avoid their tax obligations by using sham trusts face stiff penalties and possible criminal prosecution.”
The lawsuits are part of the Justice Department’s continuing nationwide effort to combat promoters of illegal tax schemes and scams. Just last week an federal court permanently barred an accountant, Robert Welti, from preparing tax returns for others and representing clients before the Internal Revenue Service. The court found that Welti had prepared returns for an abusive trust scheme. Welti was also required to provide his client list to the Justice Department. More information on that case can be found at: http://www.usdoj.gov/tax/prtax/txdv03525.htm
Last week, three federal courts found ruled that three other promoters of sham trusts were in in contempt of court. A federal judge in found Rex Black liable for $326,000 in contempt fines and ordered his arrest for failure to appear at a court hearing. On the same day, a federal judge in St. Joseph, Missouri found Randall Jarvis in contempt and fined him $500 a day until he complies with the court order to identify his customers to the Internal Revenue Service. Finally, a federal judge in Tampa found Carel “Chad” Prater in contempt, ordered him to disgorgement of funds received from customers, and ordered imposed fines of $5,000 a day for any future violations of an earlier injunction order, and, with incarceration if he continues in contempt for more than ten days. That court also appointed a special master to audit Prater’s bank accounts to ensure compliance. The court also stated that it would order Prater to be incarcerated if he remains in contempt of court for more than ten days.
The U.S. Attorney’s Office for the Central Division of California is working in cooperation with the Justice Department’s Tax Division on this case.