Promoters of Sham Tax Elimination Scheme Sentenced for Tax Fraud in Florida
Sold Tax Schemes Through Pinnacle Quest International
WASHINGTON - A federal court in Pensacola, Fla., sentenced the last two promoters of a fraudulent tax- and debt-elimination scheme to prison terms for their roles in tax fraud, wire fraud and money laundering, the Justice Department and Internal Revenue Service (IRS) announced today. Seven others were sentenced in July and October to prison terms ranging from 18 months to 12 years.
The court sentenced Claudia Hirmer to 20 years in prison and sentenced Mark Hirmer to 15 years in prison.
On March 31, 2010, a federal jury returned guilty verdicts against eight people, following a month-long trial in Pensacola, Fla., involving the promotion of fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International. The ninth entered a guilty plea and testified against the other eight at trial.
According to the evidence presented during trial, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams. Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion. For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama. Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a "reliance defense" that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.
At trial, the government established that other PQI vendors sold fraudulent schemes for eliminating credit card debt, the most successful of which was called Financial Solutions. Financial Solutions charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt. The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.
According to the evidence, another PQI vendor, MYICIS, operated as a sophisticated, computerized "warehouse bank." MYICIS was a single bank account in which customers pooled their money. MYICIS was promoted to PQI’s clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three year period.
Evidence introduced at trial showed that PQI purported to sell only CDs and tickets to offshore conferences. However, PQI acted as a gateway to its fraudulent vendors. PQI clients seeking the tax evasion and debt elimination vendors could only access the product if they joined PQI first. The cost of membership ranged from $1,350 to $18,750, depending on the level of access. In May 2008, a federal district court issued a preliminary injunction against the promoters of PQI.
"The long prison sentences that the Hirmers received today send a loud and clear message that illegal tax defiers will be investigated, prosecuted, and subjected to the full punishment of the law for their actions," said John A. DiCicco, Acting Assistant Attorney General of the Justice Department’s Tax Division.
"As Claudia and Mark Hirmer have discovered, operating outside the law and failing to pay taxes have severe consequences," said Victor S.O. Song, Chief, IRS Criminal Investigation. "Individuals who promote abusive tax schemes, establish sham offshore companies, and intentionally evade paying their fair share of taxes, undermine public confidence in our tax system. This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions."
Acting Assistant Attorney General DiCicco thanked Trial Attorneys Michael Watling, Adam Hulbig and Jonathan Marx, as well as paralegal Iris Wright, for their hard work in prosecuting the case. Mr. DiCicco also thanked the team of IRS Special Agents who investigated the case, particularly Stephen Walker and Wendy Kilpatrick, for their efforts.