News and Press Releases

United States Attorney Jenny A. Durkan
Western District of Washington

Former Partner of Convicted Income Tax Fraudster Convicted of Continuing Scheme

May 12, 2011

SHARON D. KUKHAHN, a/k/a Sharon Stephenson, 62, of Tacoma, Washington was convicted today in U.S. District Court in Tacoma of Conspiracy, four counts of Tax Evasion and Corrupt Interference with Internal Revenue Laws. The jury deliberated for about two hours following a seven day trial. KUKHAHN was indicted on April 1, 2010. She was remanded to custody following the verdict today. KUKHAHN will be sentenced by U.S. District Judge Benjamin H. Settle on August 8, 2011.

According to the indictment, KUKHAHN promoted the same type of abusive trust scheme that in 2006 sent her partner, David Carroll Stephenson, 54, to prison for eight years. Stephenson was convicted following a two week trial and ordered to pay $8.5 million in restitution. At KUKHAHN’s trial, prosecutors detailed the steps KUKHAHN took from 1999 to 2005, as part of a conspiracy to promote an abusive trust scheme designed to hide individual taxpayers’ income and assets from the IRS. KUKHAHN and other conspirators referred clients to Stephenson, who sold trust packages to more than 400 individuals. Purchasers used the trust packages to conceal income and assets from the IRS, and, as a result, failed to pay in excess of $7 million in income taxes. The jury found that through her own use of the trust packages, KUKHAHN evaded paying income taxes in 2003, 2004, 2005, and 2006.

The jury found that KUKHAHN engaged in a business that attempted to thwart the efforts of the IRS to collect taxes owed by advising clients that they did not owe taxes. For a fee, KUKHAHN helped clients obtain internal records from the IRS, claimed to “decode” them, and then mailed so-called “rebuttal packages” that supposedly would remove clients from the tax system. In reality, the packages were designed to stop audits and collection by harassing IRS employees, as well as to provide clients with a defense to tax evasion charges by creating evidence which the client could later use to dispute his or her criminal intent. KUKHAHN also provided a frivolous letter-writing service for clients that was further designed to thwart IRS efforts to collect taxes owed. KUKHAHN sold this scheme to more than 1,400 clients, thereby assisting them to cheat the U.S. out of more than $4 million in income taxes.

KUKHAHN faces up to five years in prison for each count of tax evasion and for the conspiracy count. KUKAHAN faces up to three years in prison for Corrupt Interference with Internal Revenue Laws. Each count carries a $250,000 fine.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).

The case is being prosecuted by Assistant United States Attorney Arlen Storm and U.S. Department of Justice Trial Attorney Mike Romano.


Return to Top

USAO Homepage
USAO Briefing Room
Justice 101
Community Outreach

Engaging in outreach in order to prevent crime, respond to community needs, and promote good citizenship.

Victim Witness Assistance

Making sure that victims of federal crimes are treated with compassion, fairness and respect

Project Safe Neighborhoods

Our nation-wide commitment to reducing gun crime in America

Oficinas de los Fiscales de Estados Unidos En Español
Stay Connected with Twitter