WASHINGTON - Portage, Mich., resident John A. Campbell, a former partner in and resident director of the Kalamazoo, Mich., office of the law firm of Miller, Canfield, Paddock & Stone, P.L.C., pleaded guilty to one count of conspiracy to defraud the United States, the Department of Justice announced today. Campbell’s client, Oskar René Poch, of Hickory Corners, Mich., pleaded guilty to one count of a corruptly endeavoring to obstruct the administration of the Internal Revenue laws. Poch owned and operated Trillium Staffing, an employee-leasing company in Kalamazoo. The Honorable Janet T. Neff of the U.S. District Court scheduled Poch’s sentencing for Oct. 21, 2008. No date has been set for Campbell’s sentencing.
Campbell admitted that from at least 1999 through at least 2006 he agreed with the four principals and associates of an insurance company in the U.S. Virgin Islands known as Security Trust Insurance Company to market, promote, sell and implement fraudulent tax shelters, including so-called “loss of income” or “general business risk” insurance policies. The purpose of these shelters was to defraud the United States and impede the lawful functions of the Internal Revenue Service (IRS) in computing the income taxes of their U.S. taxpayer clients.
He admitted that he conspired with others to sell these purported insurance policies to U.S. taxpayers as a tax deductible product, with the understanding that the purchasers would have most of their premiums returned to them in a non-taxable manner, and that they agreed to conceal facts from the IRS. The clients would improperly take tax deductions for the purchase of this sham product, and improperly and fictitiously reduce their income taxes.
Campbell also admitted that Poch, upon Campbell’s recommendation, caused his companies to purchase more than $3.9 million of this insurance product in 1999, 2000 and 2001. Moreover, based upon Campbell’s recommendation, Poch improperly deducted the premiums as a business expense, and Poch participated in the offshore reinsurance network through his use of nominee foreign corporations and trusts. As part of the conspiracy, Campbell arranged for Poch to receive millions in the form of sham loans to Poch and his businesses, which were never repaid by Poch.
In a separate proceeding in District Court today, Poch admitted that he provided misleading, incomplete and false answers to IRS revenue agents during a June 2002 interview conducted in a civil audit of his 1999 tax return. Poch admitted that he provided these answers in order to obstruct the IRS audit.
Assistant Attorney General Nathan J. Hochman and U.S. Attorney for the Western District of Michigan Charles Gross thanked Tax Division trial attorneys Richard M. Rolwing and Patrick J. Murray and Assistant U.S. Attorney Donald A. Davis, who are prosecuting the case. They also thanked the agents of the IRS whose assistance was essential to the successful investigation and prosecution of the case. Mr. Campbell faces a maximum potential sentence of five years in jail followed by up to three years of supervised release, and a fine of $250,000. Mr. Poch faces a maximum potential sentence of three years in jail followed by one year of supervised release, and a fine of $250,000. A trial date for the four remaining co-defendants remains to be scheduled.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.