WASHINGTON - A federal district court in Las Vegas has sentenced tax defier Irwin Schiff to 11 months in prison for criminal contempt, the Justice Department and the Internal Revenue Service (IRS) announced today. U.S. District Judge Kent J. Dawson reinstated 15 criminal contempt convictions imposed during Schiff’s 2005 trial for promotion of tax defier schemes. The 11 month sentence is to be served consecutively to the 151 month sentence previously imposed for Schiff’s conspiracy and tax convictions.
In October 2005, Schiff was convicted of conspiring to defraud the United States, aiding and assisting in the preparation of false income tax returns, filing his own false tax returns, and evading the payment of millions of dollars in back taxes owed. Additionally, Judge Dawson convicted Schiff of 15 counts of criminal contempt relative to Schiff’s unruly behavior during the trial.
According to the indictment and the evidence introduced at trial, beginning in 1995, Schiff aided thousands of taxpayers in the filing of false federal income tax returns with the IRS that reported zero taxable income despite the taxpayers earning reportable income. Schiff owned and operated Freedom Books, a business that sold books, tapes and informational packages encouraging customers not to pay income tax. According to a government witness who testified at trial, between 1997 and 2002, Freedom Books sold more than $4.2 million of these products.
The evidence presented at trial also proved that Schiff evaded the payment of more than $2 million in taxes he owed the IRS between 1979 and 1985. Schiff concealed income he earned from Freedom Books, in part, by using offshore bank accounts and conducting financial transactions through secret "warehouse" banking services. The evidence also showed that Schiff used debit cards issued by offshore banks to obtain funds he transferred offshore, that he opened bank accounts using multiple tax identification numbers and that he concealed his wealth by hiding his assets through the use of nominees.
The October 2005 conviction marked the third time Schiff was convicted for committing federal tax offenses. Prior to this conviction, Schiff has spent more than four years in jail for his tax crimes. Also, in June 2003, a federal district court barred Schiff and two associates from selling their tax scheme, which the court held falsely claims that paying federal income tax is voluntary. The order bars Schiff and his associates from advertising or selling Schiff’s "zero-income tax return" plan; preparing tax returns for others; and assisting others to violate the tax law, including by "selling services, books or other materials that provide direction about how to fill out fraudulent or false tax forms." In August 2004, the Ninth Circuit affirmed the June 2003 preliminary injunction order.
"Under the National Tax Defier Initiative, the Tax Division has committed to vigorously investigate, prosecute and convict those who engage in illegal tax defier conduct anywhere in this nation," said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division.
"Taxpayers have the right to contest their tax liability; they do not have the right to violate the law," said IRS Criminal Investigation Chief Eileen Mayer. "Mr. Schiff, like all citizens, must abide by the laws that govern all of us."
Assistant Attorney General Hochman thanked the Tax Division trial attorneys who prosecuted the case, as well as IRS Criminal Investigation special agents whose assistance was essential to the successful investigation and prosecution of the case.
More information about the Justice Department’s efforts to stop tax fraud promoters and preparers through civil and criminal actions is available at http://www.usdoj.gov/tax.