Michael Kohn Press Release

July 17, 2002
For Immediate Release

CLAYTON TAX LAWYER PLEADS GUILTY TO OBSTRUCTING THE IRS

St. Louis, Missouri: A Clayton tax lawyer has pled guilty to obstructing the Internal Revenue Service, United States Attorney Ray Gruender announced today.

MICHAEL E. KOHN, 49, a Clayton, Missouri resident, pled guilty in United States District Court to a criminal tax charge stemming from his law practice as a tax attorney in Clayton. Kohn waived indictment and entered the guilty plea before U.S. District Judge Stephen N. Limbaugh who scheduled the sentencing for October 3, 2002.

Court documents show that Kohn engaged in his criminal conduct through his Clayton law practice, the Kohn Partnership. Kohn admitted that some of his legal fees were based on the amount of tax savings he generated for his clients and, as a result, he attempted to maximize the tax benefits in order to maximize fees he earned.

Kohn entered the guilty plea to an information in which he was charged with corruptly endeavoring to obstruct the Internal Revenue laws in order to attract clients and obtain fees in return for reducing clients' tax liabilities through fictitious transactions and other strategies which placed form over substance and lacked business purpose.

The information charges and Kohn admitted to preparing documents in a fictitious transaction to support a capital loss in the amount of approximately $1.4 million dollars for a married couple in St. Charles. The transaction centered on a financial instrument called a "debenture" which is similar to a bond and is sometimes used in transactions to allow an individual to convert that interest into another form of security such as a share of stock. Through the use of a fictitious debenture, Kohn helped the couple offset substantial gains which they had made on the sale of their funeral home business.

Kohn also admitted in documents filed with the Court that his criminal conduct involved other clients as well. For instance, he admitted that he caused a capital loss of $589,742 to be reported on a tax return for another client couple on the basis of another fictitious debenture transaction. The loss was designed by the defendant to offset the capital gain which they made on the sale of two Midas Muffler businesses. The defendant admitted the debenture transactions lacked any business purpose or economic substance and, in fact, the debentures were prepared over a year after they were allegedly issued.

Court documents show that Kohn has specialized in tax law through his over 20 years of practice. He has a masters of law in taxation from New York University and has held himself out as having special skills in the areas of tax planning and representation of clients before the Internal Revenue Service.

US Attorney Ray Gruender stated, "Kohn's well known expertise in the tax area makes Kohn's guilty plea all the more significant. The IRS estimates that many billions of dollars in taxes go unpaid every year. We cannot let skilled attorneys and accountants advise their clients to employ illegal tax shelters which drain public funds that then have to be made up by hard working Americans."

Al Patton, Special Agent-in-Charge of Internal Revenue Service Criminal Investigation in St. Louis stated, "It is an unacceptable practice to hold yourself out as a tax professional providing legitimate tax advice, when, in actuality, you are promoting certain tax strategies that rely upon fictitious transactions lacking business purpose and economic substance. To ensure confidence in our nation's tax system, the IRS has a responsibility to investigate and pursue prosecution of individuals including tax professionals who corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws. Our enforcement strategy to combat this and similar schemes is to focus on the promoters and clients who have willfully used these promotions to egregiously evade tax."

The charge to which Kohn pled guilty carries a maximum sentence of three years in prison and/or a fine of $250,000.

Gruender praised the work on the case by agents of the Internal Revenue Service Criminal Investigation Division for their efforts in concluding this complex investigation. Criminal Chief James Crowe and Assistant United States Attorney James Martin handled the case for the United States Attorney's Office.

UNITED STATES ATTORNEY'S OFFICE EASTERN DISTRICT OF MISSOURI RAYMOND W. GRUENDER United States Attorney	NEWS RELEASE
For further information: Call Public Affairs Officer Jan Diltz at (314) 539-7719
July 17, 2002 For Immediate Release CLAYTON TAX LAWYER PLEADS GUILTY TO OBSTRUCTING THE IRS St. Louis, Missouri: A Clayton tax lawyer has pled guilty to obstructing the Internal Revenue Service, United States Attorney Ray Gruender announced today. MICHAEL E. KOHN, 49, a Clayton, Missouri resident, pled guilty in United States District Court to a criminal tax charge stemming from his law practice as a tax attorney in Clayton. Kohn waived indictment and entered the guilty plea before U.S. District Judge Stephen N. Limbaugh who scheduled the sentencing for October 3, 2002. Court documents show that Kohn engaged in his criminal conduct through his Clayton law practice, the Kohn Partnership. Kohn admitted that some of his legal fees were based on the amount of tax savings he generated for his clients and, as a result, he attempted to maximize the tax benefits in order to maximize fees he earned. Kohn entered the guilty plea to an information in which he was charged with corruptly endeavoring to obstruct the Internal Revenue laws in order to attract clients and obtain fees in return for reducing clients' tax liabilities through fictitious transactions and other strategies which placed form over substance and lacked business purpose. The information charges and Kohn admitted to preparing documents in a fictitious transaction to support a capital loss in the amount of approximately $1.4 million dollars for a married couple in St. Charles. The transaction centered on a financial instrument called a "debenture" which is similar to a bond and is sometimes used in transactions to allow an individual to convert that interest into another form of security such as a share of stock. Through the use of a fictitious debenture, Kohn helped the couple offset substantial gains which they had made on the sale of their funeral home business. Kohn also admitted in documents filed with the Court that his criminal conduct involved other clients as well. For instance, he admitted that he caused a capital loss of $589,742 to be reported on a tax return for another client couple on the basis of another fictitious debenture transaction. The loss was designed by the defendant to offset the capital gain which they made on the sale of two Midas Muffler businesses. The defendant admitted the debenture transactions lacked any business purpose or economic substance and, in fact, the debentures were prepared over a year after they were allegedly issued. Court documents show that Kohn has specialized in tax law through his over 20 years of practice. He has a masters of law in taxation from New York University and has held himself out as having special skills in the areas of tax planning and representation of clients before the Internal Revenue Service. US Attorney Ray Gruender stated, "Kohn's well known expertise in the tax area makes Kohn's guilty plea all the more significant. The IRS estimates that many billions of dollars in taxes go unpaid every year. We cannot let skilled attorneys and accountants advise their clients to employ illegal tax shelters which drain public funds that then have to be made up by hard working Americans." Al Patton, Special Agent-in-Charge of Internal Revenue Service Criminal Investigation in St. Louis stated, "It is an unacceptable practice to hold yourself out as a tax professional providing legitimate tax advice, when, in actuality, you are promoting certain tax strategies that rely upon fictitious transactions lacking business purpose and economic substance. To ensure confidence in our nation's tax system, the IRS has a responsibility to investigate and pursue prosecution of individuals including tax professionals who corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws. Our enforcement strategy to combat this and similar schemes is to focus on the promoters and clients who have willfully used these promotions to egregiously evade tax." The charge to which Kohn pled guilty carries a maximum sentence of three years in prison and/or a fine of $250,000. Gruender praised the work on the case by agents of the Internal Revenue Service Criminal Investigation Division for their efforts in concluding this complex investigation. Criminal Chief James Crowe and Assistant United States Attorney James Martin handled the case for the United States Attorney's Office.