FOR IMMEDIATE RELEASE|
THURSDAY, JULY 15, 2004
TDD (202) 514-1888
CO-FOUNDER OF GLOBAL PROSPERITY GUILTY OF TAX FRAUD
Defendant Hid $50 Million In Sales In Bogus Trusts,
Nominee Entities And Offshore Accounts
WASHINGTON D.C. - Eileen J. OConnor, Assistant Attorney General for the Tax Division, Department of Justice; John McKay, U.S. Attorney for the Western District of Washington; and Nancy Jardini, Chief, Internal Revenue Service Criminal Investigation Division, announced today that in Seattle, Washington, Daniel Andersen, a co-founder of Global Prosperity, pled guilty to a felony tax charge of conspiracy to defraud the United States by impeding the Internal Revenue Service (18 U.S.C.§371). U.S. District Court Judge Thomas S. Zilly set sentencing for October 15, 2004.
Moving assets offshore or into bogus trusts to hide them from the IRS is always a bad choice, said Assistant Attorney General Eileen J. OConnor. People who participate in such schemes risk losing their assets to the tax scam promoters and being prosecuted for tax fraud. In the end, they will still owe the taxes, plus interest and possible penalties.
The IRS has made the investigation of abusive schemes a national priority, said Nancy Jardini, IRS Chief, Criminal Investigation. Individuals who promote these schemes as well as some of their clients are getting the message that this type of abusive activity will not be tolerated.
On May 11, 2004, Mr. Andersen, who resided in Leominster, Massachusetts and Oxnard, California, was indicted -- along with David Struckman, Lorenzo (Zo) Lamantia (also known as Lorenzo Milano); Kuldip Singh (also known as Kay Singh and Kay Milano); and Dwayne Robare -- for conspiracy to defraud the United States by impeding the Internal Revenue Service (18 U.S.C. §371). The indictment alleges that from 1996 until May 2002, the defendants formed and operated Global Prosperity, which received more than $50 million from sales of a home-study series of wealth-building audiotapes and compact discs, sold for $1,250; and tickets to domestic and offshore seminars, sold at prices ranging from $6,250 to $37,000 each.
The so-called wealth building strategies allegedly included fraudulent methods of income tax elimination, such as placing assets in purported foreign or common law trusts without giving up control of the assets and attempting to remove oneself from the jurisdiction of the United States. The defendants allegedly concealed income earned from the sale of Global Prosperity products through the use of bogus trusts, nominee entities and related bank accounts that they owned and controlled, including offshore bank accounts into which the defendants deposited portions of their profits. They allegedly maintained signature authority over the offshore bank accounts and transferred funds back into the United States through wire transfers and debit cards.
In a statement of facts submitted to the court, Mr. Andersen admitted that he conspired with others to defraud the IRS by utilizing a system of bogus trusts, nominee entities and related domestic and offshore bank accounts to conceal millions of dollars in income generated from the sale of Global Prosperity products. Mr. Andersen admitted that he and his accomplices maintained the anonymity of Global Prosperity by changing the name of the business, using mail drops to conceal its location, conducting financial transactions in cash, and discouraging the use of Social Security numbers to escape notice by the Internal Revenue Service. Mr. Anderson also admitted that he employed several people in Marlborough, Massachusetts, but did not report their wages to the IRS and did not issue Forms W-2 or Forms 1099. Mr. Andersen admitted that he failed to file individual income tax, corporate income tax, trust income tax and partnership returns; and declarations of a financial interest in, or signature authority over, a foreign bank account, as required by law. Finally, Mr. Andersen admitted that his actions caused a tax loss of between $2,500,000 and $7,000,000. He has agreed to cooperate fully with the Internal Revenue Service in paying all delinquent taxes, including interest and penalties.
Mr. Andersen faces a maximum potential sentence of five years imprisonment followed by three years supervised release, a $250,000 fine and liability for the costs of prosecution. Several other individuals associated with Global Prosperity have already been convicted. In February 2003, Margo Jordan, a Global Prosperity retailer from Wilton, Maine, pled guilty to a charge of income tax evasion (26 U.S.C. § 7201). In May 2003, Jeffrey and Shoshanna Szuch of Charleston, SC, who, respectively, served as Seminar Coordinator and Director of Operations for Global Prosperity, pled guilty to a charge of income tax evasion. In May 2003, Laura J. Struckman, the wife of defendant David Struckman, was found guilty on a charge of conspiracy to structure a financial transaction. She was sentenced to 21 months imprisonment.
The remaining defendants in this case are awaiting trial. A trial date has not yet been set. The charges contained in the indictment are only allegations. In the American justice system, a person is presumed innocent unless and until he or she is proven guilty in a court of law.
Assistant Attorney General Eileen J. OConnor thanked Tax Division Trial Attorneys Larry J. Wszalek and Mark T. Odulio, who prosecuted 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.