FOR IMMEDIATE RELEASE |
THURSDAY, DECEMBER 16, 2004
TDD (202) 514-1888
CREATIVE-PROBLEM-SOLVING AUTHOR INDICTED FOR TAX EVASION
Defendant Allegedly Used Partnerships and Offshore Accounts to Evade Income Taxes
WASHINGTON, D.C. - Eileen J. OConnor, Assistant Attorney General for the Tax Division, United States Department of Justice; and Nancy Jardini, Chief, Internal Revenue Service Criminal Investigation, announced today that in Buffalo, New York, a federal grand jury returned a six-count indictment charging Dr. Roger Firestien with income tax evasion (26 U.S.C. § 7201) and willfully filing a materially false tax return (26 U.S.C. § 7206(1)).
If convicted, Dr. Firestien faces maximum potential sentences totaling 28 years in jail and $1.5 million in fines.
According to the indictment, Dr. Firestien, an author who has written and spoken about creative problem solving, purchased a Complex Business Organization (CBO) from Andersons Ark & Associates (AAA). The CBO was a business-structuring plan which consisted of two components, called the Look Back and the Look Forward programs.
The indictment alleges that, as part of the Look Back program, Dr. Firestien formed a Nevada partnership which generated a fictitious loss for 1997. Dr. Firestien allegedly filed his 1997 income tax return reporting a $355,181 loss from the partnership, resulting in a reported taxable income of $0. The indictment also alleges that he carried back the losses in order to obtain refunds of taxes previously paid for 1994, 1995 and 1996, totaling $26,662.
The indictment alleges that, as part of the Look Forward program, Dr. Firestien converted his business to a Subchapter S Corporation. Dr. Firestien allegedly formed a second Nevada partnership in which he and a second AAA entity purportedly held, respectively, 5% and 95% partnership interests. The corporation allegedly made payments to the partnership, which the latter reported as income, with offsetting deductions for marketing, outside services, and advertising expenses. Dr. Firestien allegedly reported on his 1998-2001 individual income tax returns only his purported 5% share of the partnership income. Dr. Firestien also allegedly arranged with AAA to have the monies paid to the AAA partner transferred into a bank account in Costa Rica which he then accessed by use of a VISA debit card and into an investment program.
In December 2002, in United States v. Keith Anderson, et al. (W.D. Wash.), 10 defendants were charged in an 87-count indictment with conspiracy to defraud the United States and other federal crimes, in connection with the marketing of allegedly fraudulent offshore tax shelters through Andersons Ark & Associates. Trial of that case, which began on November 1, 2004, continues.
The charges contained in an 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.
Additional information about the Justice Departments Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.