FOR IMMEDIATE RELEASE|
WEDNESDAY, APRIL 9, 2003
TDD (202) 514-1888
FIVE INDICTED IN ALLEGED TAX AND INVESTMENT FRAUD SCHEME
WASHINGTON, D.C. - Eileen J. O’Connor, Assistant Attorney General of the Justice Department’s Tax Division, and Paul Warner, U.S. Attorney for the District of Utah, announced today that a federal grand jury returned a one-count indictment charging five Utah men with conspiracy to commit mail and wire fraud and to defraud the Internal Revenue Service of more than $5 million. The defendants named in the indictment are: David J. Orr, attorneys at law Michael N. Behunin and Todd R. Cannon, and certified public accountants Lanny R. White and Max C. Lloyd.
The indictment alleges that from 1993 to 2002, the defendants - using the names Advanta Strategies, World Contractual Services and Cornerstone West L.L.C. - marketed, promoted and sold a fraudulent trust scheme to over 300 clients through seminars, promotional materials and opinion letters. The defendants falsely and fraudulently represented that their trust scheme would lawfully eliminate or substantially reduce individuals’ income tax liabilities, according to the indictment.
The indictment alleges that the defendants falsely and fraudulently claimed that by placing businesses, homes, investments and other assets into the names of trusts, individuals would lawfully and substantially reduce their income tax liabilities, while continuing to maintain control over and enjoyment of all their income and assets, and that personal expenses related to assets placed in a trust could be deducted on federal income tax returns.
According to the indictment, the defendants caused false and fraudulent U.S. Individual Income Tax Returns to be filed with the IRS that omitted all or substantially all of their clients’ income and individual income taxes owed; the defendants allegedly conspired to defraud the IRS of more than $5 million.
Additionally, the indictment alleges that the defendants conspired to use the U.S. mail and interstate wire communications to obtain approximately $7 million and property from clients by representing themselves as persons with expertise in the area of investments, when in fact they did not. They allegedly represented the investments that they marketed, promoted, and sold as safe and secured, when in fact they were not. Furthermore, the defendants allegedly claimed that they were successful investors, when in fact they were not, and that said investments were making the promised returns, when in fact they were not - all according to the indictment.
The maximum penalty for violating 18 U.S.C. § 371 is five years in prison and a fine of $250,000.
The case is being prosecuted by Special Assistant U.S. Attorneys from the Department of Justice’s Tax Division. The investigation was conducted by the IRS Criminal Investigation and the Federal Bureau of Investigation.
Individuals in the indictments are presumed innocent unless or until proven guilty in court.