WASHINGTON, D.C. - A federal grand jury in Salt Lake City indicted six individuals for promoting a tax fraud scheme that cost the federal treasury over $20 million in taxes, the Department of Justice and Internal Revenue Service (IRS) announced today. The indictment includes charges of conspiracy to defraud the United States and conspiracy to commit mail and wire fraud against all six defendants, as well as tax evasion and aiding and assisting the filing of false tax returns against five of the defendants. The defendants are attorney Dennis B. Evanson of Sandy, Utah; Certified Public Accountant (CPA) Steven F. Petersen, of Coalville, Utah; accountant Brent H. Metcalf, of Cottonwood, Utah; CPA Reed H. Barker of Littleton, Colorado; investment broker Wayne F. DeMeester of Sammamish, Washington; and attorney Graham R. Taylor of Tiburon, California.
The indictment alleges that the fraud scheme took multiple forms, but chiefly involved providing documentation for fictitious currency transaction losses, false insurance expense deductions and bogus capital losses to the defendants and approximately 75 of their clients for the purpose of offsetting taxable income. The defendants’ scheme utilized, among other things, offshore companies, offshore bank accounts, the services of offshore nominees, and opinion letters which purported to give legal authority to the fraudulent transactions.
“Tax cheats defraud all honest taxpayers,” said Eileen J. O’Connor, Assistant Attorney General for the Department of Justice’s Tax Division. “The Justice Department and the IRS are using all available tools to investigate and prosecute tax fraud.”
The Justice Department and the IRS, noting an increase in the sophistication and brazenness of tax scam promotions across the country, have initiated a new approach to dealing with these types of schemes. Specifically, prosecutors now target the proceeds of the crime. Toward this end, the indictment also includes a notice to seek forfeiture of the proceeds of the crimes alleged in the indictment-including money, real property and vehicles-that defendants Evanson and Petersen received from the scheme. The indictment alleges that Evanson and Petersen together collected over $4 million in fees related to the scheme.
“Those who participate in or encourage taxpayers to structure transactions for the purpose of evading taxes are engaging in criminal activity,” said Nancy J. Jardini, IRS Chief, Criminal Investigation. “Today’s indictment reaffirms IRS’s commitment to investigate and recommend prosecution against professional accountants and attorneys who manipulate the law to create fictitious financial transactions.” “Individuals who seek to defraud the United States government of tax revenue should not be permitted to retain the proceeds of their illegal efforts,” U.S. Attorney Paul M. Warner said.
If convicted, the defendants face maximum potential sentences of five years imprisonment and a fine of the greater of $250,000 or twice the amount of the tax loss for the conspiracy and each income tax evasion charge.
The charges contained in the indictment are only allegations. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
Assistant Attorney General O’Connor and U.S. Attorney Paul Warner thanked Assistant U.S. Attorney Loren Washburn and Tax Division Attorney Caryn D. Mark, who are handling this case. They also thanked the special agents of the IRS whose assistance was essential to the successful investigation of this case.