Justice Department Sues California Lawyer And Accountant To Bar Them From Promoting Tax Fraud Schemes
San Diego Tax Attorney And CPA Allegedly Helped Clients Illegally Circumvent Pension Plan Rules
WASHINGTON - The United States has asked a federal court to bar Scott Waage, a San Diego tax lawyer, and Robert Jensen, a San Diego accountant, from promoting several fraudulent tax schemes and from preparing any more federal tax returns, the Justice Department announced today. According to the government’s civil injunction complaint, Waage promotes schemes that illegally reduce the taxes of his high-income customers through the use of sham consulting companies and through the creation of discriminatory pension and employee benefit plans that only benefit highly-compensated employees. Jensen allegedly prepares tax returns claiming bogus tax deductions associated with these schemes.
As alleged in the complaint, one of the schemes involves creating sham consulting corporations, purportedly headquartered in customers’ personal residences, that do not actually perform consulting services. Rather, customers allegedly funnel funds to the corporations to pay for their personal expenses, which they then deduct on the corporate income tax returns. Other alleged schemes involve unlawfully using employee benefit plans to pay customers’ personal expenses and unlawfully using pension plans to increase and accelerate deductions and avoid income taxes on plan pay outs.
In an example detailed in the government complaint, Waage allegedly assisted a Solana Beach, Calif., couple in establishing a new consulting corporation “headquartered” in their personal residence. Waage and Jensen then allegedly helped the couple improperly deduct their personal living expenses, including utility bills, gardening expenses and even personal vacations to Hawaii. The complaint also alleges that Waage has used these fraudulent schemes to reduce his own reported taxable income by $4.5 million and that Jensen has used them to deduct personal vacations and his daughter’s college tuition. The government alleges that the Internal Revenue Service has audited more than 1,000 tax returns as a result of Waage and Jensen’s tax schemes, and it estimates that the harm to the U.S. Treasury from the schemes exceeds $10.8 million.
Since 2001, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent tax returns. Information about these cases is available on the Tax Division’s website.