Press Release
Contact:
DONALD A. DAVIS
UNITED STATES ATTORNEY
PHONE: (616) 456-2404
WEST MICHIGAN ATTORNEY AND CLIENT SENTENCED FOR TAX CRIMES IN CONNECTION WITH A FRAUDULENT INSURANCE TAX SHELTER
TUESDAY, NOVEMBER 3, 2009 - GRAND RAPIDS, Mich. - U.S. Attorney Donald A. Davis, and Maurice Aouate, Special Agent in Charge, IRS, Criminal Investigation, Detroit announced today that Portage, Mich. resident John A. Campbell, a former partner in and resident director of the Kalamazoo, Mich. office of the law firm of Miller, Canfield, Paddock & Stone, P.L.C., was sentenced to 60 months of imprisonment for conspiring to defraud the United States. Campbell also was ordered to pay restitution of $40,736 and a fine of $10,000. Campbell’s client, Oskar René Poch, of Hickory Corners, Mich., was also sentenced to one year of probation and ordered to pay restitution of $217,830.44 and a fine of $100,000 for corruptly endeavoring to obstruct the administration of the Internal Revenue laws. Poch owned and operated Trillium Staffing, an employee-leasing company in Kalamazoo. Both defendants were sentenced by U.S. District Judge Janet T. Neff in Grand Rapids.
On April 16, 2008, Campbell pleaded guilty to one count of conspiring to defraud the United States. He admitted that from at least 1999 through at least 2006 he agreed with the four principals and associates of an insurance company in the U.S. Virgin Islands known as Security Trust Insurance Company to market, promote, sell and implement fraudulent tax shelters, including so-called “loss of income” or “general business risk” insurance policies. Three of those four men—Peter Pegg, Robert Larsen, and Craig Stone—were recently convicted on October 20, 2009 after a four week jury trial before Judge Neff. The fourth man with whom Campbell admitted he conspired—Anthony Merlo—pleaded guilty to the conspiracy charge before the trial, and is scheduled for sentencing later this month. The purpose of the tax shelters that Campbell and the others promoted and sold was to defraud the United States and impede the lawful functions of the Internal Revenue Service (IRS) in computing the income taxes of the defendants’ U.S. taxpayer clients.
Campbell admitted that he conspired with these others to sell these purported insurance policies to U.S. taxpayers as a tax deductible product, with the understanding that the purchasers would have most of their premiums returned to them in a non-taxable manner, such as through the use of “loans” from offshore foreign corporations which the defendants helped the U.S. taxpayers to set up in tax haven countries like Nevis and the Bahamas. Campbell also admitted that they all agreed to conceal from the IRS several key facts about the returned funds, and that they agreed to alter, conceal and destroy documents regarding the program as well.
Campbell also admitted that after he introduced his long time Michigan client, Poch, to the product, Poch caused his companies to purchase more than $3.9 million of this insurance product in the years 1999, 2000 and 2001. Poch improperly deducted the premiums as a business expense, saving over $1.63 million in taxes for the three year period. Finally, Poch paid Campbell’s firm to have set up a foreign corporation and trust in Nevis and later the Bahamas, through which Poch later had access to over $3 million of his insurance premiums. As part of the conspiracy, Campbell arranged for Poch to receive millions in the form of “loans” to Poch and his businesses, which were never repaid by Poch.
On April 16, 2008, Poch pleaded guilty to corruptly endeavoring to obstruct the administration of the IRS. He admitted that he knowingly provided misleading, incomplete and false answers to IRS revenue agents during a June 2002 interview conducted in a civil audit of his 1999 tax return. Poch admitted that he provided these answers in order to obstruct the IRS audit. However, Poch cooperated with the government’s investigation and testified at the trial of Campbell’s co-conspirators, which was taken into account by Judge Neff. Since pleading guilty, Poch has repaid the $1.63 million in taxes to the IRS, using in part the funds left in the foreign corporation’s bank account. Judge Neff, however, imposed the maximum sentence on Campbell and a significantly higher than recommended fine of $100,000 against Poch, stating that their crimes strike at the heart of our system of government, a government that nurtured and provided Campbell and Poch with the very economic environment in which Campbell and Poch were fortunate enough to prosper and succeed.
U.S. Attorney Davis and Special Agent in Charge Aouate thanked Tax Division trial attorneys Richard M. Rolwing, Patrick J. Murray, and Jessica Nuzzellilo. They also thanked the agents of the IRS whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.
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