FOR IMMEDIATE RELEASE|
THURSDAY, FEBRUARY 12, 2004
TDD (202) 514-1888
SELLERS OF BOGUS TAX ADVICE PROGRAM
PLEAD GUILTY TO TAX CHARGES
WASHINGTON, D.C. - Two Arizona residents pled guilty today to charges they failed to report income earned from a widely marketed tax seminar program, Assistant Attorney General for the Tax Division Eileen J. O’Connor, U.S. Attorney for the District of Arizona Paul K. Charlton and Internal Revenue Service Criminal Investigation Chief Nancy J. Jardini announced.
John J. Rizzo and wife Carol A. Rizzo pled guilty to felony charges of conspiracy and to charges of willfully failing to file their income tax return. Rizzo also pled guilty to felony charges of willfully aiding and assisting in the preparation of a false income tax return and perjury before the grand jury.
“Unscrupulous tax scam promoters aggressively market a variety of fanciful schemes purporting to eliminate tax liability,” said Assistant Attorney General O’Connor. “People who promote or participate in such schemes are risking serious civil penalties, and when appropriate, criminal prosecution.”
The defendants admitted, in their plea agreements that from 1999 to 2001, Mr. Rizzo was a prominent vendor with the Institute of Global Prosperity (IGP). At seminars hosted by IGP, Mr. Rizzo promoted the Millennium 2000 Reliance Defense Program (M2K) package to thousands of people at offshore seminars and resulted in more than $4 million in sales. At an earlier court hearing, as reflected in a videotape made available to the court, Mr. Rizzo appeared at these seminars wearing judicial robes and portrayed himself as a judge and an expert on tax law.
The Rizzos also admitted Mr. Rizzo sold each M2K package for approximately $2,300.00. Additionally, they admitted they provided materials and documentation that purported to prove, among other things, that one could lawfully stop filing income tax returns and cease having income taxes withheld from personal wages based upon the long-rejected notion that the Sixteenth Amendment to the Constitution had not been legally ratified.
They further admitted they concealed the income earned from the sales of M2K packages during the period 1999 through 2002, by using a variety of dishonest and deceitful means, including the use of offshore bank accounts and third-party merchant accounts to conduct credit card sales. The Rizzos have been in pre-trial detention for the past ten (10) months.
In December 2003, Cheryl Cully, a co-defendant in the case, pled guilty to a felony charge of obstruction of justice and a charge of willfully failing to file her 2001 income tax return. Ms. Cully faces maximum potential sentences totaling six (6) years’ imprisonment, fines totaling $500,000 and liability for the costs of prosecution. Ms. Cully is scheduled to be sentenced before Judge Silver on March 29, 2004.
“The IRS continues to aggressively enforce tax laws in order to ensure a strong American economy and that all taxpayers pay their taxes,” said Nancy Jardini. “These defendants used a myriad of arguments and abusive financial arrangements to evade taxes. In this case, unlawful offshore banking used for the purpose of evading the payment of taxes has been unmasked by the financial investigative efforts of IRS special agents.”
Rizzo faces a maximum potential sentence of fourteen years in prison, ten years of supervised release, fines totaling $1,000,000, as well as liability for the costs of prosecution. Mrs. Rizzo faces a maximum potential sentence of six years in prison, fines totaling $500,000 and liability for the costs of prosecution. Judge Roslyn O. Silver of the U.S. District Court for the District of Arizona has scheduled sentencing for September 27, 2004.
Assistant Attorney General O’Connor thanked Tax Division trial attorneys Edward Groves, Larry Wszalek and Mark Odulio for prosecuting the case. She also thanked the special agents of the Internal Revenue Service whose assistance was essential to the successful investigation and prosecution of the case.
More information about the Justice Department’s Tax Division can be found at <http://www.usdoj.gov/tax>.