WASHINGTON — The Justice Department announced today that a federal judge in Greenville, South Carolina has permanently barred Heather Alexander Ferguson of Laurens, South Carolina, from promoting an alleged tax-fraud scheme. The government complaint in the case alleges that Ferguson operated a business in Greenville, South Carolina promoting the so-called “861 Argument” and helping her ex-husband, John Howard Alexander, promote a sham-trust tax scam.
The suit, filed in the U.S. District Court for the District of South Carolina, alleges that Ferguson, in promoting the “861 Argument,” falsely advised customers that U.S. citizens are “non-resident aliens” or “sovereign State citizens” who are not required to pay tax on income earned in the United States. The complaint also alleges that Ferguson advised customers that they could rely on frivolous arguments sent to the IRS as a basis for not reporting income and paying tax. Ferguson allegedly falsely told customers that the IRS’s failure to respond to the frivolous arguments would give the customers a so-called “reliance defense” to criminal tax charges. In a separate suit filed recently, the Justice Department asked the same court to permanently bar Ferguson’s ex-husband, Alexander, from promoting both schemes. The complaints in the two civil injunction cases—filed in the U.S. District Court for the District of South Carolina—allege that Ferguson and Alexander’s tax-fraud schemes have caused an estimated $48 million in losses to the Federal Treasury.
The suit against Alexander alleges that he sold sham-trust packages to customers for as much as $2,495 and helped his customers hide their income from the IRS using offshore sham trusts. Both suits ask the court to order the defendants to give the Justice Department a list of their customers’ names, addresses, e-mail addresses, Social Security numbers, and telephone numbers. The order entered against Ferguson requires her to do this.
The complaints allege that Ferguson and Alexander jointly promoted the schemes while they were married from 1996 through 2004. The suits allege that Ferguson and Alexander’s divorce decree divided the tax-fraud schemes as marital assets, with Ferguson required to pay Alexander a “royalty” for the trust packages sold through her business.
Offshore transactions and trust misuse are two of the IRS’s Dirty Dozen tax scams for 2006, which are listed at http://www.irs.gov/newsroom/article/0,,id=154293,00.html.
The Justice Department has obtained numerous injunctions against promoters of sham-trust schemes and the frivolous “U.S. Sources” or “Section 861” argument. Information about these cases is available at http://www.usdoj.gov/tax/taxpress2006.htm.
Since 2001, the Justice Department has obtained injunctions against more than 190 tax-fraud promoters and fraudulent return preparers. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax/index.html.