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Friday, August 15, 2008
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Utah Attorney Sentenced to 120 Months in Prison in $20 Million Offshore Tax Fraud Conspiracy

WASHINGTON – Attorney Dennis B. Evanson of Sandy, Utah, was sentenced today by U.S. District Judge Tena Campbell in Salt Lake City to 120 months in prison and 36 months supervised release, the Justice Department and Internal Revenue Service (IRS) announced. The court also ordered that Evanson forfeit four pieces of real property, a Hummer and a Toyota Tundra, and entered a money judgment in the amount of $2,774,133.04.

A federal jury convicted Evanson of conspiracy to commit mail and wire fraud, tax evasion and assisting in the filing of false tax returns charges in February 2008, following a two week trial. Evidence introduced during trial showed that Evanson’s scheme cost the U.S. Treasury more than $20 million in taxes.

Evanson’s fraud scheme took multiple forms, including the use of false documentation for fictitious currency transaction losses, false insurance expense deductions and bogus capital losses, all for the purpose of fraudulently offsetting taxable income for clients. The scheme utilized, among other things, offshore companies, offshore bank accounts in the Cayman Islands and Nevis, the services of offshore nominees and opinion letters that purported to give legal authority to the fraudulent transactions.

According to the evidence, Evanson, along with his co-defendants, conspired between 1996 and April 2005 to conceal portions of his clients’ income from the IRS and to create false deductions for the purpose of reducing the income tax paid by clients. Evidence presented at trial showed that Evanson and his co-conspirators knew that the deductions on the tax returns were false and fraudulent. Evanson and a co-conspirator were paid a fee for their services that was typically equal to 30 percent of the tax evaded by the clients.

"As today’s sentence demonstrates, professionals, such as Evanson, who promote fraudulent tax schemes and assist others in participating in these schemes, will be investigated, indicted, tried, convicted and incarcerated," said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. "Those who participate and promote fraudulent tax scams and schemes do so with eyes wide open to the severe consequences of their illegal conduct, including long prison sentences, steep fines and loss of real and personal property."

Four other defendants associated with the scheme pleaded guilty to conspiring to defraud the United States. Accountant Brent Metcalf of Cottonwood, Utah, pleaded guilty to conspiracy and aiding in the filing of a false tax return on Jan. 25, 2008. Attorney Graham R. Taylor of Tiburon, Calif., pleaded guilty on Jan. 24, 2008. Certified Public Accountants Stephen F. Petersen of Coalville, Utah, and Reed H. Barker of Littleton, Colo., pleaded guilty to tax fraud on January 18, 2008. Petersen also pled guilty to aiding in the preparation of a false tax return on behalf of a client. All four defendants are awaiting sentencing before Chief Judge Campbell.

"Individuals who assist others to defraud the United States government of tax revenues should not be permitted to retain the proceeds of their illegal efforts," said Brett Tolman, U.S. Attorney for the District of Utah. "Today's sentence sends a message that promoters of tax schemes will not only serve long prison sentences, but the government will target the proceeds of the crime by seizing real property, vehicles and money which the defendant acquired as the result of his criminal conduct."

"Promoters of elaborate offshore criminal financial schemes for the purpose of committing tax evasion isn't tax planning; it's criminal activity," said Eileen Mayer, Chief, IRS Criminal Investigations. "Taxpayers should be wary of anyone claiming to be an expert on how to hide income from the IRS."

Assistant Attorney General Hochman thanked Tax Division trial attorneys Caryn Mark and Leigh Kessler, as well as Assistant U.S. Attorney Loren Washburn, who prosecuted the case. He also thanked the special agents of the IRS whose assistance was essential to the successful investigation and prosecution of this case.