WYOMING BUSINESSMAN SENTENCED FOR HIS ROLE IN TAX FRAUD SCHEME
Assisted Prominent Seattle Businessman in Evading Income Taxes
RUSSELL J. BROWN, a businessman from Teton County, Wyoming, was sentenced today in U.S. District Court in Seattle to two years of probation, a $10,000 fine and 240 hours of community service for aiding and assisting in the filing of a false tax return of Paul D. Bekins. Bekins is the former President, Treasurer and majority stock owner of Bekins Moving and Storage in Seattle, Washington. Bekins pleaded guilty for his role in this offense in September 2004, and was sentenced last March to six months of home detention as well as 18 months of supervised release and 300 hours of community service.
BROWN and Bekins were both members of Tower Executive Resources (Tower), an organization based in Denver, Colorado which assisted its members evade federal income taxes. Tower was operated by Paul D. Harris, Lester R. Retherford, and Robert N. Bedford. Tower helped its members set up offshore bank accounts and offshore corporations to hide income from the IRS. Most of these offshore corporations were established in the Turks and Caicos Islands in the British West Indies, a known tax haven. While these corporations were owned on paper by a local taxicab driver from the Turks and Caicos Islands, they were actually controlled by the Tower members. Taxpayers paid up to $50,000 to join Tower and use its services. Harris and Retherford were convicted after a lengthy trial and are currently incarcerated. Bedford is scheduled to go to trial in Denver in November. Over the years, numerous other Tower members from around the country have been prosecuted for tax fraud as part of this scheme.
BROWN assisted Bekins in attempting to evade federal income taxes through a series of complicated schemes designed by Tower. The schemes were designed to move income earned by Bekins, through corporations controlled by BROWN, and into offshore corporations controlled by Bekins. In one such scheme, BROWN funneled approximately $2.5 million from the sale of Bekins Moving and Storage’s records storage business through one of BROWN’s corporations and into Bekins’s offshore corporation. Subsequently, Bekins failed to report this income on his tax returns. As a result, BROWN helped Bekins evade approximately $1.3 million in federal income taxes.
At sentencing Assistant United States Attorney Robert Westinghouse told the court that “When one resident cheats on their taxes, it impacts every other taxpayer.”
BROWN admitted to Chief U.S. District Judge Robert S. Lasnik that he had learned an extremely hard lesson. “I would never have dreamed in my entire life that I’d be standing here. I’m ashamed. I’m humiliated.”
Chief Judge Lasnik noted that BROWN did not reap great profit from the scheme, making approximately $12,000. “Part of the lesson here is that just because someone (Bekins) has a lot of money and owns a big company and travels in certain circles, doesn’t make them the person you should listen to.” Chief Judge Lasnik urged BROWN to use his community service to better the community saying, “The redemption lies in what you do from this point forward, not in looking back.”
This case was investigated by the Internal Revenue Service - Criminal Investigation, and prosecuted by Senior Litigation Counsel Robert Westinghouse and Department of Justice Trial Attorney Robert Livermore.
For additional information please contact Emily Langlie, Public Affairs Officer, United States Attorney’s Office for the Western District of Washington at (206) 553-4110.