Russell J. Brown, of Jackson, Wyoming, was indicted on tax fraud charges,
the Department of Justice and Internal Revenue Service (IRS) announced
today. On November 3, 2005, a federal grand jury sitting in Seattle,
Washington indicted Brown on one count of conspiring to defraud the
United States between 1991 and 2005.
The indictment alleges that Brown participated in a lengthy and elaborate
scheme to evade: (1) federal estate taxes pertaining to his grandmother's
estate; (2) his own federal income taxes and the federal income taxes
for certain corporations which he controlled; and (3) the federal income
taxes of his business associate Paul D. Bekins and the federal income
taxes for corporations which Bekins controlled.
In the early 1990's, Brown joined an organization based in Denver,
Colorado, which eventually became known as Tower Executive Resources
(Tower). Tower assisted its clients to evade federal income taxes through
the use of several different methods, including a false invoicing scheme
and a false option agreement scheme. By using these schemes, Brown was
able to surreptitiously send several hundred thousand dollars into secret
offshore bank accounts to evade federal taxes. He also created numerous
trusts and corporations to hide his assets from the IRS if the IRS ever
attempted to collect any of these taxes due and owing.
The indictment further alleges that Brown assisted fellow Tower member
Paul D. Bekins use of fraudulent Tower schemes such as the false option
scheme to evade federal income taxes. Bekins sent Brown millions of
dollars from his businesses which Brown then deposited into Bekins's
secret offshore bank accounts without paying federal income taxes. Bekins
pleaded guilty in federal district court in 2004 for his role in this
offense. In addition, two of the promoters of Tower, Paul D. Harris
and Lester R. Retherford, were convicted after a trial in Denver, Colorado,
earlier this year. They are scheduled to be sentenced on December 1,
2005. A third promoter, Robert N. Bedford, is scheduled to be tried
in Denver in January 2006. Numerous other Tower clients from across
the country have either pleaded guilty or have been found guilty of
tax offenses for engaging in similar conduct as Brown.
If convicted, Brown faces a maximum of five years imprisonment followed
by up to three years supervised release and a fine of $250,000 or twice
the tax loss.
The charges contained in the indictment are only allegations. A defendant
is entitled to a fair trial in which it will be the government's burden
to prove guilt beyond a reasonable doubt.
Click here for additional information
about the Justice Department's Tax Division and its enforcement efforts.
