FOR IMMEDIATE RELEASE |
MONDAY, JULY 26, 2004
TDD (202) 514-1888
JUSTICE DEPARTMENT ACTS TO BAR ALLEGED FRAUDULENT TAX SCHEMES
Northern Ohio Men Allegedly Prepared False Tax Returns and Promoted Fraudulent Tax Schemes
WASHINGTON, D.C. - The Justice Department today sued two Canton-area men in federal court in Cleveland, seeking to bar them from preparing federal tax returns and selling fraudulent tax schemes. The civil suit alleges that James L. Binge, of Canal Fulton, and Terrence A. Bentivegna, of Canton, sell sham trusts and prepare fraudulent tax returns for customers based on those trusts. The complaint also alleges that Binge and Bentivegna prepared tax returns based on the frivolous “Section 861” argument, named after the tax code provision it misinterprets, which posits that U.S. citizens are required to pay taxes only on income earned outside of the United States.
The suit filed in the U.S. District Court for the Northern District of Ohio, in Cleveland, alleges that the returns Binge and Bentivegna prepared for trust customers reduce or eliminate the customers' reported income-tax liabilities by improperly deducting nondeductible personal expenses and fictitious "management fees." The government’s complaint seeks an injunction barring the two them from marketing or selling any type of abusive tax shelter, plan, or trust and from otherwise preparing tax returns or otherwise appearing before the IRS. In addition, the government seeks an order directing Binge and Bentivegna to turn over to the Department of Justice the names, social security numbers, addresses and telephone numbers of all individuals who have purchased the defendants’ abusive tax shelters, and directing the defendants to inform their customers of the falsity of the products they have purchased.
“The Justice Department is vigorously pursuing those who prepare fraudulent tax returns and sell sham-trust schemes,” said Eileen J. O'Connor, Assistant Attorney General for the Department of Justice's Tax Division. “People who sell or use these fraudulent schemes can expect serious trouble, including criminal charges where appropriate.”
According to the court papers filed today, Binge and Bentivegna's fraudulent returns and trust schemes are estimated to have cost the Treasury more than $18 million so far. Papers filed in the case claim that the pair also threatened to file retaliatory actions against any IRS employee who challenged returns they prepared.
Court papers filed in the case state that Binge is a former certified public accountant whose license was revoked by the Ohio Board of Accountancy. Court papers also allege that Binge was administratively barred by the Securities and Exchange Commission in 2001 from associating with any securities broker or dealer.
Misuse of trusts tops the IRS's most recent list of “Dirty Dozen” tax schemes. More information about the “Dirty Dozen” tax scams is available at: http://www.irs.gov/newsroom/article/0,,id=120803,00.html.
Information on other recent tax-scheme injunction actions can be found at the Justice Department Tax Division website: http://www.usdoj.gov/tax/taxpress2004.htm.