Aug. 29 , 2006

 

ST. MARYS MAN SENTENCED TO 3+ YEARS
FOR FILING FALSE TAX RETURNS
BASED ON SHAM TRUST SCHEME

KANSAS CITY, KAN. –A business owner in St. Marys, Kan., was sentenced Monday to 42 months in federal prison for filing false tax returns.

Michael E. Diesel, the founder and former president of Telecommunications Research Associates, was convicted after a jury trial in February on three counts of filing false income tax returns. The company provided training for major corporations in the telecommunications industry.

“Although Mr. Diesel’s income was more than $1.5 million in 2000, he reported a taxable income of less than $110,000,” said U.S. Attorney Eric Melgren. “He was one of many clients of a sham trust scheme that was designed to cheat the government out of million of dollars in taxes.”

According to evidence presented at trial, Diesel reported a taxable income for 2000 of $108,788 although he knew his taxable income was approximately $1,698,038. For 1999, he reported a taxable income of $106,754, although he knew his taxable income was approximately $1,523,826. For 1998, he reported a taxable income of $103,549 although he knew his taxable income was approximately $439,049.”

Diesel was a trustee of various trusts which he established after receiving advice from the Aegis Company, which is based in Chicago. In each of the three years, Diesel signed tax returns for Diesel Business Trust that included deductions for distributions to a trust in the Central American nation of Belize. Those returns credited the Belize trust with $335,500 for the 1998 tax year, $1,417,072 for 1999, and $1,589,250 for 2000. The funds were not distributed to the trust, however. Diesel effectively controlled the funds and disposed of them for his own purposes. He did not report those sums as income and did not pay income taxes on them.

This prosecution is one of several nationally involving Aegis trust schemes. In April 2004, in Chicago, indictments were returned charging eight of the Aegis principals in connection with alleged promotion and selling of Aegis schemes.

Melgren commended the Internal Revenue Service-Criminal Investigation, which investigated the case, and Assistant U.S. Attorney Leon Patton, who prosecuted.

“IRS-Criminal Investigation has made the investigation of abusive trust schemes a national priority and will aggressively investigate individuals involved in this type of criminal activity,” said James D. Vickery, Special Agent in Charge of IRS-CI.

 

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