HAWAII MAN ARRESTED ON TAX FRAUD, WIRE FRAUD AND OBSTRUCTION CHARGES

Scheme Allegedly Hid Assets from IRS in Offshore Trusts and Bank Accounts

WASHINGTON, D.C. - Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division; Edward H. Kubo, Jr., U.S. Attorney for the District of Hawaii; and Nancy Jardini, Chief, Internal Revenue Service, Criminal Investigation; announced today the arrest of John David Van Hove, also known as “Johnny Liberty.” On April 7, 2005, a federal grand jury sitting in Honolulu, Hawaii indicted Mr. Van Hove for corruptly endeavoring to obstruct and impede the due administration of the tax laws, willful failure to file individual income tax returns, and wire fraud. The indictment had been sealed pending the defendant’s arrest.

“Buying into fraudulent schemes to reduce or eliminate your tax liabilities can have costly consequences," said Assistant Attorney General O’Connor. "You will still owe taxes, along with interest and penalties, and you will be at risk of criminal prosecution.”

“The IRS is focusing our enforcement efforts on abusive tax schemes that disadvantage every law abiding citizen,” said Jardini, IRS Chief, Criminal Investigation. “Today's arrest and charges reinforce our message that the IRS is working aggressively to enforce the tax laws.”

The indictment alleges that Mr. Van Hove operated a financial planning and investment advice business. He allegedly offered to his clients various schemes for hiding income and assets from the IRS. The schemes included:

• A method by which an individual could purportedly remove himself from the taxing jurisdiction of the United States;
  
  
• Use of “common law trusts” to conceal ownership and control of assets and income;
  
  
• Use of offshore trusts with related bank accounts in which assets would be repatriated through the use of a debit/credit card;
  
  
• International business corporations (IBCs), entities that had no independent business purpose, and did not represent ongoing businesses, but in whose names bank accounts were opened in the Bahamas and elsewhere for the purpose of concealing ownership and control of assets and income.

The indictment also alleges that Mr. Van Hove was aware of IRS inquiries into his tax liabilities when he opened, controlled, and maintained ownership of nominee domestic and foreign bank accounts to conceal his income from the IRS. He allegedly earned $281,890 from his work with an organization known as the Institute for Global Prosperity, yet willfully failed to file income tax returns as required by law. He also allegedly solicited and obtained approximately $700,000 from clients, using a series of misrepresentations and false promises, including offering rates of return of up to 25% per month, or 300% per year. Most clients allegedly received no profits and lost their entire investments.

If convicted, the defendant faces the following maximum potential sentences:

• On the obstruction charge, five years imprisonment followed by up to three years supervised release and a $250,000 fine;
  
  
• On each failure to file charge, a maximum potential sentence of one years imprisonment, followed by up to one years of supervised release, and a $100,000 fine;
  
  
• On each wire fraud charge, a maximum potential sentence of twenty years imprisonment, followed by up to three years supervised release, and a $250,000 fine.

The charges contained in the indictment are only allegations. In the American justice system, a person is presumed innocent unless and until he or she is proven guilty in a court of law.

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