FOR IMMEDIATE RELEASE |
WEDNEDAY, FEBRUARY 11, 2004
TDD (202) 514-1888
FEDERAL COURT IN OREGON BLOCKS TAX SCAM PROMOTION
Oregon Man Permanently Barred From Preparing Federal Income Tax Returns for Customers, and Ordered to Turn Over Customer List to Justice Department
WASHINGTON, D.C. - The Justice Department today announced that the U.S. District Court for the District of Oregon in Medford has permanently barred Samuel S. Fung from preparing federal tax returns and promoting his "business restructuring plan," which the Department alleged is a fraudulent tax scheme.
According to the civil injunction complaint filed in the case, Fung prepared tax returns for customers claiming erroneous deductions for non-deductible personal living expenses and false charitable contributions.
The court order requires Fung to give the Justice Department a list of the names and social security numbers of all his customers since 1994. In consenting to be barred from preparing tax returns and promoting the alleged scheme, Fung did not admit to the Justice Department's allegations.
"Illegal tax schemes cost honest taxpayers billions of dollars each year," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "The Justice Department will continue to shut down these scams at the source - the promoters and preparers of returns who promote and facilitate tax evasion."
The complaint also alleged that Medford, Oregon resident Fung operated a "business restructuring" scheme using the name Professional Business Consultants, LLC. Fung allegedly advised his customers to "restructure" their trust arrangements through the use of his "business restructuring plan." Under the plan, customers were advised to create sham charitable foundations, which were to own 98% of the customers' businesses while the customers were to own the remaining 2%. All the customers' business profits were to be "donated" or distributed to the sham charity. Fung also allegedly advised customers that they could borrow from the charitable foundation to pay their personal living expenses, and those borrowed funds did not have to be repaid and were nontaxable. The defendant allegedly advised his customers that under his "business restructuring plan," their business entities did not have to file federal tax returns.
Court papers filed in the case also alleged that Fung was closely associated with National Trust Services, a sham-trust marketing organization. One of the founders of National Trust Services, Roderick A. Prescott, was permanently barred last year from selling sham trusts. According to the complaint, Fung prepared federal tax returns for customers that resulted in an estimated loss of more than $6 million in tax revenue to the U.S. Treasury. More information on this case can be found at www.usdoj.gov/tax/txdv03720.htm.
LaQuita Taylor-Phillips, a trial attorney in the Justice Department's Tax Division, represented the United States in this case. The Justice Department has obtained several injunctions in the past two years against other promoters of sham-trust tax scams. Information on those cases can be found at:Black - http://www.usdoj.gov/tax/txdv02355.htm
Welti - http://www.usdoj.gov/tax/txdv03094.htm
Prescott - http://www.usdoj.gov/tax/txdv03332.htm
Joy - http://www.usdoj.gov/tax/txdv03280.htm
Sweet - http://www.usdoj.gov/tax/txdv02095.htm
Mosher - http://www.usdoj.gov/tax/txdv03588.htm
Jarvis - http://www.usdoj.gov/tax/txdv03397.htm
Chung - http://www.usdoj.gov/tax/txdv03497.htm
More information about the Justice Department's Tax Division can be found at www.usdoj.gov/tax.