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Thursday, August 26, 2010

Justice Department Sues California Man to Stop Tax Schemes That Allegedly Cost the Treasury at Least $30 Million

Civil Suit Alleges That Pasadena Man Promotes Tax Fraud Schemes Involving Sham Pension and Welfare-Benefit Plans

WASHINGTON – The United States has asked a federal court to permanently bar a California man from promoting alleged sham pension-plan and welfare-benefit-plan tax fraud schemes, the Justice Department announced today. The civil injunction suit against William Alexander, who is based in Pasadena, Calif., and his two companies – Retirement Plan Services Inc. and Lyons Pensions Inc. – was filed in U.S. District Court in Los Angeles.

According to the complaint, Alexander helps small business owners adopt sham pension plans. He allegedly falsely advises customers that they can claim significant deductions for purported contributions to these sham pension plans in order to reduce or eliminate their federal income taxes. The complaint also alleges that Alexander fraudulently re-characterizes his customers’ non-deductible personal expenses as purported deductible pension-plan contributions.

One example of misconduct cited in the complaint was a letter in which Alexander allegedly advised a married couple from Florida who are physicians "to look for old personal checks that you wrote from 1/1/02 through 9/15/03 that are personal checks that I could re-characterize as pension contributions." The complaint also quotes a letter that Alexander allegedly sent to a Los Angeles customer in which Alexander explains that between $50,000 and $60,000 that the customer had made as a down payment on her condominium had been re-characterized as a pension-plan contribution. The complaint further alleges that Alexander helped a California cardiologist, who made a purported $350,625 welfare-benefit plan contribution, to get the funds back by using a sham loan.

The complaint also alleges that Alexander advises his customers that they can re-characterize their salaries as pension plan contributions that he can refund to them through sham loans. For example, the complaint alleges that Alexander advised a Los Angeles customer that she could send Alexander a $200,000 check as a purported pension plan contribution, and that Alexander would then return that customer’s money to her.

According to the complaint, Alexander helps customers adopt pension plans that illegally exclude rank-and-file employees. The complaint cites a letter Alexander allegedly sent to one of his clients, a California physician, in which Alexander explains that the goal is to "exclude the employees from this rich pension plan that I use for the owner." The complaint further alleges that Alexander tries to conceal his pension-plan scheme by purposely not filing required documents with the Internal Revenue Service and Department of Labor.

Alexander’s promotion of the pension plan and welfare-benefit tax fraud schemes have allegedly cost the government at least $30 million.

In the past 10 years the Justice Department’s Tax Division has obtained hundreds of injunctions against tax scheme promoters and tax preparers. Information about these cases is available on the Justice Department website

Press Release Number: 
Updated September 15, 2014