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    Thom Mrozek
    Public Affairs Officer

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    thom.mrozek@usdoj.gov

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    Release No. 10-119

    August 10, 2010

    JUSTICE DEPARTMENT SUES TO STOP TWO LOS ANGELES RESIDENTS FROM PROMOTING ALLEGEDLY BOGUS TRUSTS

    Case Alleges They Encourage Taxpayers to Form Trusts as a Means of Tax Evasion

    LOS ANGELES – The United States has sued two Brentwood residents who allegedly promoted the formation and operation of “common-law” trusts for the purpose of tax avoidance, and the Justice Department is asking a federal judge to issue an order that will prevent the pair from further promoting the fraudulent scheme.

    According to the government’s complaint, which was filed Friday in United States District Court, Gwenn Wycoff, 65, and Frank Ozak, 70, promoted the creation of common-law trusts. Promoting the scheme through personal appearances, a website (http://www.passingbucks.com/) and self-published books called “The Art of Passing the Buck,” Wycoff and Ozak urged taxpayers to place their personal assets and businesses into a variety of related trusts to create the impression that they no longer owned the assets. Thereafter, the complaint alleges, the trusts were ostensibly run by independent trustees – often Ozak and Wycoff – when, in fact, the customers continued to exercise control over the assets they had placed into the trusts.

    A major goal in creating the trusts, the complaint alleges, was to make it appear as if the taxpayers had little to no income, thereby evading the payment of federal income taxes. The complaint alleges that Wycoff and Ozak had their customers sign an “Oath of Privacy,” which threatened customers with penalties of up to $100,000 if they disclosed to the government facts revealing the illegality of the trusts.

    The government’s lawsuit contends that the trusts created with the assistance of Wycoff and Ozak (including one they created for themselves) either are sham entities or led to filing of fraudulent income tax returns. The total amount of tax deficiencies assessed by the government to date in just four cases involving Wycoff and Ozak-created trusts is more than $1.1 million.

    In the past decade, Justice Department attorneys have obtained more than 470 injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available at http://www.justice.gov/tax/taxpress2010.htm.

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    Release No. 10-119

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