FOR IMMEDIATE RELEASE                                         TAX
THURSDAY, JUNE 27, 1996                            (202) 514-2008
                                               TDD (202) 514-1888

 LEADERS OF 'PATRIOT' TAX PROTEST SCHEME HIT WITH HEAVY SENTENCES

     WASHINGTON, D.C. --  Severe penalties have been imposed on
the organizers of a so-called "patriot" tax protest scheme that
is estimated to have cost the Treasury as much as $50 million and
defrauded participants of $10 million in fees.  

     On Wednesday, Federal Judge Vaughan R. Walker in San
Francisco sentenced Phillip Marsh, age 72, also known as Milton
Pilot, Jr., founder and leader of the Pilot Connection Society,
to 17  years in prison and his wife, Marlene, age 60, co-founder
and marketing director of the organization, to 14 years in
prison.  Bail for both Marshes was revoked and they were taken
into custody.

    Selling an "Untax Package," which the Marshes guaranteed
would permanently and legally remove the purchaser from the
obligation to pay federal or state income taxes, the Society
enrolled over 12,000 members, disseminating its anti-tax, anti-
government message in a series of seminars and on national
television.  The "Package" included detailed instructions on how
to commit tax evasion under the guise of being a "First
Amendment" organization.  The defendants all stated they were
part of the Patriot movement.

     "This successful prosecution of one of the nation's largest
illegal tax protestor organizations sends a clear message to
those who would cheat or counsel others to cheat the government
that they will be held fully accountable for their crimes,"
Attorney General Janet Reno stated.

    At a ceremony at the Justice Department today, the Attorney
General will bestow the Department's John Marshall Award for
Litigation to the trial team that tenaciously pursued the Pilot
Connection Society case:  Sandra Teters and Thomas Carlucci,
Assistant U.S. Attorneys in the Northern District of California,
and Steven P. Ward, Senior Trial Attorney in the Justice
Department's Tax Division in Washington.

    Altogether, six defendants were convicted on 72 counts of tax
evasion, mail fraud, conspiracy to defraud the United States, and
related charges after a six-week trial that ended in December
1995.  Other than Phillip and Marlene Marsh, those convicted
were:
         Darrell Spencer, age 28, of Sunnyvale, California, the  
          General Manager of The Pilot Connection Society and the 
          Marshs' son-in-law.  Spencer was sentenced to 7 years. 

         Jill Spencer, age 29, wife of Darrell Spencer, also of
          Sunnyvale, the Office Manager, received a sentence of 7
          years.

         John Campion, age 62, of Las Vegas, Nevada, the
          National Coordinator of sales training.  Campion
          received a sentence of 5 years.   

         Douglas Carpa, age 50, of Tempe, Arizona, a self-styled
          trust promoter who provided sham trusts to The Pilot
          Connection Society members to be used to conceal assets
          from the IRS.  Carpa was sentenced to 4  years.  

    Assistant Attorney General Loretta C. Argrett, in charge of
the Tax Division, said, "These individuals perpetrated a fraud on
the American taxpayers, and this successful prosecution
demonstrates the government's commitment to ensuring the
integrity of our tax system."

     The Pilot Connection Society, which touted itself as the
largest "patriot" organization in the nation, was headquartered
at various times in San Jose and Stockton, California and Parker,
Colorado.  It operated from April 1990 through December 1993,
selling its "Untax Package" through a multi-level marketing
system that utilized sales personnel and franchise operators in
several parts of the nation.  Approximately 4,000 individuals
purchased the "Untax Package," which sold for as much as $2100.
  
     This case was investigated by personnel of the San Francisco
and San Jose Districts of the Internal Revenue Service and the
United States Attorney's office in San Francisco, as well as by
the Tax Division of the Department of Justice.  

     Michael J. Yamaguchi, United States Attorney for the
Northern District of California, said:  "We have taken a big step
toward ensuring the integrity of our tax system and rooting out
those who abuse and manipulate the legal process."  Yamaguchi
noted that the Marshes and Jill Spencer were also convicted of
filing "commercial liens" against the judges and Internal Revenue
Service employees during the course of the investigation.

     "Commercial liens, which are bogus documents filed in county
recorders' offices to attempt to cloud title to property, have
become a popular harassment device employed by tax protestors in
recent years," said Yamaguchi.  

     This sentencing closely follows the sentencing in Dallas in
May of eight Pilot Connection Society Associate Members,
franchisees who held the "rights" to market the "Untax Package,"
Package," who were convicted on a similar charge of conspiracy to
defraud the United States.  U.S. District Court Judge Barefoot
Sanders sentenced five of the eight defendants to eight-years
incarceration; one defendant to nine years and the eighth
defendant received three years.   

     This brings to 34 the total number of The Pilot Connection
Society members who have been charged with criminal tax offenses
or other criminal offenses.  Thirty were convicted on federal
criminal tax offenses; two others were convicted on state charges
in Colorado and Nevada, and two were acquitted.  

     Assistant Attorney General Argrett noted that The Pilot
Connection Society had aggressively spread its anti-tax message
on such television programs as "20/20" and "The Jerry Springer
Show," as well as through local media.  

     Ted Brown, Assistant Commissioner, Criminal Investigations,
Internal Revenue Service, stated that "When individuals attempt
to interfere with good government, it is important that we send a
loud message that it will not be tolerated."  
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