D.C. Federal Court Acts to Halt Alleged “Sham Cemetery” Tax Scheme
Court Enjoins Washington, D.C.-area Father and Son and Poughkeepsie, N.y., Man Who Allegedly Promoted Fraudulent Schemes with Huge Purported Tax Benefits
A federal court has permanently barred Michael Strauss from promoting tax shelters, the Justice Department announced today. The government complaint in the case alleged that Strauss, of Herndon, Va., his son Patrick Strauss, of Washington D.C., and Joseph Barreiro of Poughkeepsie, N.Y., promoted and sold several fraudulent tax schemes, including sham cemetery investments. The men allegedly promoted the cemetery schemes to customers located in Northern Virginia, Maryland and Washington, D.C., using shell companies that they controlled.
Judge Robert L. Wilkins of the U.S. District Court for the District of Columbia signed the civil injunction order, to which Michael Strauss agreed without admitting the government’s allegations. The order permanently bars Strauss from promoting the cemetery schemes identified in the complaint or any other tax shelter, from marketing business or tax services that facilitate noncompliance with federal tax laws, and from engaging in any fraudulent conduct subject to penalty under the tax laws. The same court previously entered injunction orders against Barreiro and Patrick Strauss, to which they consented without admitting the allegations against them.
The defendants allegedly falsely told their customers that they had purchased “licenses” worth tens of millions of dollars that purportedly gave the shell companies the right to future profits from performing funeral services at two purported cemeteries located in Virginia and New York. According to the complaint, the men also falsely claimed that those companies could deduct a portion of the licenses’ supposed value and then pass on millions of dollars in tax losses to the customers. The government contends that there were no arm’s-length purchases of licenses and that the license values were fabricated to generate fake tax benefits. The defendants also allegedly used fictitious promissory notes to siphon off, for their personal benefit, millions of dollars that they told their customers were being “invested.”
In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of abusive or fraudulent tax schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Justice Department website.
United States v. Michael A. Strauss, et al.