JAMES ZANDER PLEADS GUILTY TO TAX EVASION Great Falls Dentist Used Fraudulent Religious Enterprise To Claim Exemption From Taxation
The United States Attorney's Office announced that during a federal court session in Great Falls on May 5, 2014, before U.S. District Judge Brian Morris, JAMES ZANDER, 63, pled guilty to one count of Tax Evasion. Zander faces a potential sentence of five years in prison, $250,000 fine, the costs of prosecution and three years of supervised release. Restitution will include unpaid taxes, interest and penalties.
In an Offer of Proof filed by Assistant U.S. Attorney Chad Spraker, Spraker told the Court that Zander, a dentist who owned and operated Dental Care of Great Falls beginning in 1992, filed individual income tax returns until the 2001 tax year. Zander's tax preparer prepared an IRS Form 1040 2001 individual income tax return for Zander and an IRS Form 1120S for Zander's solely owned corporation, Dental Care of Great Falls. Zander did not file the individual 2001 return. Dental Care of Great Falls, however, filed the corporate return, which was signed by Zander. The corporate return listed $101,755 in officer compensation and $117,769 in pass-through income. Dental Care of Great Falls also submitted a 2001 IRS Form W-2 to the IRS listing Zander's wages at $101,755. Spraker provided the Court Zander's filing history to establish his knowledge of the filing requirements.
On February 20, 2002, Zander formed Solid Rock Partners, LP in Nevada; on July 16, 2003, he formed Royal Priesthood Society, a corporation sole, in Nevada; and on June 10, 2008, he formed American Humanitarian Project, another corporation sole, in Arizona. Zander opened and maintained bank accounts for each of these entities.
Zander maintained two bank accounts for Dental Care of Great Falls. According to Zander's assistant, one account funded office bills and the other account funded Royal Priesthood Society. Zander used money from Royal Priesthood Society for personal expenditures. According to Zander's bookkeeper, Zander instructed her to classify checks from Dental Care to Royal Priesthood Society as charitable contributions. From 2006 to 2009, $271,000 in checks was issued from Dental Care of Great Falls to Royal Priesthood Society. From 2002 to 2009, Zander purchased five parcels of land in the name of Solid Rock Partners and Royal Priesthood Society.
On February 17, 2004, Zander sent a signed IRS Form 1040 2001 individual income tax return to the IRS listing zeroes in each of its sections for income, adjusted gross income, and tax liability. The return requested a $27,131 refund, the amount Zander had withheld that year.
On July 2, 2004, the IRS sent Zander a letter informing him that his 2001 return was frivolous and warned him of the consequences of not paying his taxes. Based upon the 2001 IRS Form 1120S for Dental Care of Great Falls, the W-2 issued to Zander, and other documents received by the IRS, the IRS completed an audit and assessed Zander's 2001 tax liability at $86,195.37. On May 10, 2006, the IRS sent Zander a letter with the proposed assessment and again warned him of the consequences of failing to pay his taxes. When Zander did not respond to the letter, the IRS issued him a June 30, 2006, notice of deficiency, and on February 26, 2007, the IRS assessed his 2001 tax liability at $87,694.90. The IRS later revised its assessment and calculated a $100,972.81 liability as of March 10, 2010 for the tax year 2001.
In December 2007 and January 2008, the IRS issued a notice of levy to Zander with respect to bank accounts he held at Stockman Bank. In response, Zander sent letters to Stockman Bank asserting that the levies were unlawful and Zander is not subject to taxation. After the IRS collected approximately $2,000 from the levies, Zander stopped making deposits into the Stockman accounts and closed them on November 18, 2008.
On April 13, 2009, IRS Revenue Agent Graves served summonses on other financial institutions holding Zander's money, including First Interstate Bank. Zander closed his bank account at First Interstate Bank on October 16, 2009.
On October 23, 2009, and November 2, 2009, Zander sent fictitious $300 million "Private Indemnity Bonds" to the U.S. Treasury Secretary. The "Private Indemnity Bonds" purported to offset Zander's pre-existing and future liabilities.
IRS Revenue Officer Murray placed liens on Zander's property at the Cascade County Clerk and Recorder's office on October 7, 2009. The following day Murray hand delivered three letters to Zander warning of IRS collection for the tax years 2001 and 2005. On October 19, 2009, Zander responded and attached the IRS's levy notices stamped "Refused for Cause." On October 21, 2009, Murray sent Zander a letter warning him of the frivolous nature of his arguments and the potential for criminal penalties. On November 30, 2009, Zander sent Rena Moore, the Cascade County Clerk, a letter demanding she release the tax liens within ten days.
Despite Zander's tax debt, Dental Care of Great Falls earned over $1 million in gross receipts from 2006 to 2009. From 2003 to 2009, Zander spent $274,905 on precious metals, and from 2002 to 2009 he spent $108,168 on five parcels of land.
Sentencing is set for August 15, 2014, at the Missouri River Courthouse in Great Falls, Montana.
The case was investigated by the Criminal Investigation Division of the Internal Revenue Service.