FOR IMMEDIATE RELEASE|
THURSDAY, APRIL 14, 2005
TDD (202) 514-1888
SELF-PROCLAIMED “TAX LAW SPECIALIST” IN OHIO PLEADS GUILTY TO TAX, MAIL AND WIRE FRAUD CHARGES
WASHINGTON, D.C. - Eileen J. OConnor, Assistant Attorney General for the Tax Division, U.S. Department of Justice; Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio; Gregory A. White, U.S. Attorney for the Northern District of Ohio; and Nancy Jardini, Chief, Internal Revenue Service Criminal Investigation Division, announced today that Joseph W. Flickinger pleaded guilty to charges of conspiracy and mail and wire fraud. On each of the charges of conspiracy and mail fraud, Flickinger faces a maximum potential sentence of five years in jail, followed by up to three years of supervised release, and $250,000 in fines. On the charge of wire fraud, Flickinger faces a maximum potential sentence of twenty years in jail, followed by up to three years of supervised release and a $250,000 fine.
On February 17, 2004, Flickinger was indicted, along with Steven Allen Ritchey and Joseph E. Kennedy, on charges of mail fraud and conspiracy to defraud the IRS and to commit mail fraud. At his arraignment, the court released Flickinger on bond. He was later arrested at the Marysville, Ohio airport while attempting to take a private plane to flee to Antigua. He has since remained in custody.
People should be skeptical of tax reduction schemes that seem too good to be true, said Assistant Attorney General OConnor. Before participating in such ‘investments, seek the advice of a knowledgeable and reputable tax professional who has no stake in the deal.
"Fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be held accountable for their actions," stated Chief Jardini. "We should not forget that the ultimate victims of tax fraud are the honest taxpayers, those individuals who file truthful tax returns voluntarily and pay their share of taxes."
Flickinger admitted that he conspired to commit mail fraud and to defraud the IRS by mailing seven counterfeit and fraudulent cashiers checks from a fictitious bank to the IRS in an attempt to pay-off his clients and his coconspirators tax liabilities. These charges relate to Flickingers attempts to defraud the IRS by mailing counterfeit and fraudulent cashiers checks from a fictitious foreign bank, called Euro Credit and Exchange Bank, Ltd. to the IRS, to pay the delinquent tax liabilities of several clients of an entity known as American Financial. American Financial, located in Ohio and Utah, provided tax, financial and estate planning services. Flickinger is its former owner and operator. In total, the checks purported to be worth $112,000. He also admitted that, along with these counterfeit and fraudulent cashiers checks, he and others mailed what purported to be legal orders, called Writs of Praecipe, allegedly from a so-called common law court. These writs directed the IRS to cash the checks and refund the remainders to his clients or suffer damages in excess of $10,000,000. Flickinger also admitted to forging some of the clients endorsements on the back of the fraudulent cashiers checks and forging other signatures on these writs.
Flickinger also pleaded guilty today to a two-count information that charged him with mail and wire fraud against both the IRS and his clients. In regard the mail fraud charge alleged in the Information, Flickinger admitted that he conducted seminars through American Financial during which he made false statements about the IRS. He also asserted that he could detax his clients -- purportedly by having them work -- without having taxes withheld and income taxes paid. He also helped his clients submit to the IRS and sometimes to employers various false and frivolous documents, including documents to stop the withholding of income taxes from clients wages; claims to the IRS for refunds of withheld taxes; and documents to thwart the IRS efforts to enforce the employers and employees tax obligations. Over a four-year period, Flickinger admittedly prepared approximately 384 zero tax returns, which listed the number zero on all lines for reporting items of income or deductions, except for the lines claiming refunds. These zero tax returns claimed refunds totaling approximately $2,320,545. Flickinger admitted that instead of the refunds claimed, his clients owed approximately $1,100,000 in income taxes, in addition to the $2,320,545 that had been withheld and paid to the IRS.
With respect to the wire fraud charge alleged in the information, Flickinger admitted that from 2000 through August, 2004, he had defrauded the IRS and 34 of his clients of more than $3.6 million. He admitted that he induced American Financial clients to create what Flickinger falsely called pure family trusts. He falsely claimed that these trusts were beyond the reach of law or regulation. In addition, he induced his clients to invest their personal or trust funds with him through American Financial. He falsely characterized the investments as loans, and falsely stated that none of the gains or interest paid had to be reported to the IRS because the transactions were private. He lied to his clients, telling them he was investing their monies in at least six separate funds that he knew did not exist. He also prepared and sent to his clients fictitious performance charts, client statements, and account summaries.
Flickinger also admitted that, instead of investing his clients monies in these funds, he traded in international currency markets, where he suffered significant losses. He used clients monies to purchase Jaguar and Hummer automobiles including a stretch Hummer limousine and a condominium located in Norwalk, Ohio and to pay for travel by private plane to Antigua. He also transferred some of the clients monies to third parties in Utah and elsewhere pursuant to various agreements.
Finally, according to the information and plea agreement, Flickinger has agreed to the entry of a money judgment against him for the amount of remaining loss associated with the wire fraud scheme charged in Count Two of the information, specifically, $2,598,273.32. He also agreed to forfeit and surrender to the United States various assets worth an estimated $323,333 to be used to pay restitution to the victims of this wire fraud scheme.
Assistant Attorney General OConnor, United States Attorney Lockhart, and U.S. Attorney White thanked Assistant U.S. Attorney John M. Siegel and Tax Division Trial Attorneys Richard M. Rolwing and John T. McAdams, who prosecuted the case. They also thanked the special agents of the IRS whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Departments Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.