FOR IMMEDIATE RELEASE|
TUESSDAY, DECEMBER 23, 2003
TDD (202) 514-1888
JUSTICE DEPARTMENT FILES SUIT TO STOP
WASHINGTON, D.C. - The Justice Department today announced that it filed two lawsuits in federal courts in Washington and Oregon to stop Tacoma, Washington resident David Carroll Stephenson and Medford, Oregon resident Samuel S. Fung from promoting alleged scams in which customers use sham trusts to evade federal income taxes.
According to court papers filed in the two cases, Stephenson’s promotion has cost the federal treasury more than $43 million in estimated lost tax revenue, while Fung’s scheme has cost an estimated $6 million. The two civil injunction suits are part of the Justice Department’s nationwide crackdown on promoters who sell fraudulent tax schemes and help customers evade taxes.
“The Justice Department and the Internal Revenue Service are working together on civil and criminal fronts to combat illegal tax schemes,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “Those who promote or participate in fraudulent schemes can expect to face substantial civil penalties and, where appropriate, criminal prosecution.”
The papers filed today in the U.S. District Court for the Western District of Washington in Tacoma allege that Stephenson targets his scheme to medical professionals and other self-employed individuals. The suit also names as defendants several of Stephenson’s businesses - American Business Estate & Tax Planning Service; Advocate and Associates, Inc.; Advocate NW & Co., Inc.; A-1 Credit & Co.; the American Business Law, Inc. and American Business & Estate Planning. Government papers filed in the case allege that one of Stephenson’s customers, a resident of Carmel, California, understated his income on his tax returns for three years by a total of more than $1.1 million. The government’s filing claims that Stephenson has customers in 22 states - Washington, Oregon, California, New Mexico, Texas, Ohio, Minnesota, Illinois, Arizona, North Carolina, Idaho, Utah, Florida, Colorado, Nevada, New Hampshire, Iowa, South Dakota, Maryland, New Jersey, Alaska, and Hawaii, as well as in British Columbia.
The complaint filed in the U.S. District Court for the District of Oregon in Medford alleges that Fung operates a tax-return preparation business and a “business restructuring” service called Professional Business Consultants, LLC. According to the complaint Fung improperly advises his customers to claim tax deductions for such non-deductible personal living expenses as home maintenance costs, food, clothing and vacations. The complaint also states that Fung advises customers to divert their income to sham charitable trusts that they control and then claim false charitable contribution deductions.
More information about the Justice Department’s efforts against tax-scam promoters can be found at www.usdoj.gov/tax/taxpress2003.htm.