FOR IMMEDIATE RELEASE:

July 31, 2001

Norma Estimbo Lacy
Public Affairs Specialist
Phone: 713/567-9388 Fax: 713/718-3389
E-Mail:
usatty.txs@usdoj.gov

ATTORNEY CONVICTED IN TAX FRAUD SCHEME THAT INVOLVED DIVERTED INCOME TO FOREIGN TAX HAVEN TO AVOID TAXES

Joe Giannullo & Shelly Goldklang, DOJ-Tax Division, Washington, D.C.

(HOUSTON) Gregory A. Serres, United States Attorney for the Southern District of Texas, announced today that Patrick Strong, a Houston attorney, was convicted by a jury on seven counts of tax fraud in a scheme which he diverted $1 million of legal fee income to a foreign corporation to avoid taxes. The trial lasted three days. Strong was convicted on four counts of tax evasion relative to his personal income tax returns for the years 1992 through 1995. Strong was also convicted on three counts of subscribing to false corporate tax returns for the years 1993 through 1995.

At trial, evidence established that Strong formed two foreign entities to avoid taxes. The first of these was Cumber Holdings, Inc., a corporation in the British Virgin Islands. The other entity was a trust in Bermuda. Evidence at trial showed that Strong directed $1 million in income, which he personally earned in his capacity as an attorney, to be diverted to his foreign corporation. The evidence during trial further revealed that Strong controlled the money he directed offshore and utilized the money for his personal benefit, which included the purchase of a beach house in Galveston, Texas. Testimony and evidence presented during trial also showed that Strong, whose law practice specialized in international legal matters, established a consulting agreement between himself and his foreign corporation and diverted his income through a foreign bank account to avoid paying taxes totaling of over $247,000.

The case was tried before Judge Kenneth M. Hoyt in Houston. Sentencing is scheduled for October 15, 2001.

This case was investigated by Special Agents of the Internal Revenue Service and was prosecuted by the Department of Justice, Tax Division, Washington, D.C. Joe Giannullo and Shelly Goldklang handled the prosecution for the government.


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