Department of Justice Seal Department of Justice
FOR IMMEDIATE RELEASE
MONDAY, JULY 21, 2008
WWW.USDOJ.GOV
TAX
(202) 514-2007
TDD (202) 514-1888

FEDERAL COURT BARS SOUTHERN CALIFORNIAN FROM PROMOTING PAYROLL & TRUST TAX SCHEMES

WASHINGTON A U.S. District Court judge in Riverside, Calif., has permanently barred David Clancy from promoting an employment tax scheme and a sham transaction scheme, the Justice Department announced today. Clancy, of Hacienda Heights, Calif., consented to the civil injunction.

According to the government’s complaint in the case, Clancy and Jovita Arcaro, of Rancho Cucamonga, Calif., promoted a scheme that helped businesses evade federal employment taxes by disguising a portion of employees’ wages as other payments not subject to employment tax. The court enjoined Arcaro last year. According to the government complaint, the defendants had approximately 50 business customers for the payroll tax scheme, which cost the United States about $1.7 million.

The complaint alleged that in a second scam the defendants helped individual customers use sham trusts to claim income tax deductions for such non-deductible items as depreciation on their residences and other personal expenses.

The injunction order requires Clancy to give the Justice Department a list of all customers who participated in the schemes.

“Promoters and employers who evade employment taxes not only cheat the government, but they also cheat employees, who earn Social Security and other benefits based on their true wages earned,” said Nathan J. Hochman, Assistant Attorney General for the Justice Department’s Tax Division.

Hochman thanked Justice Department trial attorney Hilarie E. Snyder, who handled the case, and Internal Revenue Service agent Shereen Hawkins, who conducted the pre-suit investigation.

Since 2001, the Justice Department has obtained injunctions against more than 345 federal tax return preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

Related Documents:

  United States v. David W.Clancy, Jr., et al.
Stipulated Final Judgment of Permanent Injunction

(PDF document)


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