Two Wyoming Residents And One Arizona Resident Convicted Of Tax Fraud And Obstruction Of Justice
WASHINGTON – On May 28, a jury in the District of Wyoming convicted two Cheyenne, Wyoming, residents and a Sedona, Arizona, resident on charges of conspiracy to defraud the United States and obstructing a grand jury investigation. The announcement was made by Acting Assistant Attorney General Caroline D. Ciraolo for the Justice Department’s Tax Division, U.S. Attorney Christopher A. Crofts for the District of Wyoming and Special Agent in Charge Gilbert R. Garza for the Internal Revenue Service (IRS) Criminal Investigations.
Joseph Ruben Hill aka Joe Hill, 56, and Lucille Kathleen Hill aka Kathy Hill, 58, both of Cheyenne, Wyoming, and Gloria Jean Reeder, 68, of Sedona, Arizona, were convicted on charges of conspiracy to defraud the United States and obstructing a grand jury investigation following a three-week trial. In July 2014, Joe Hill, Kathy Hill and Reeder were indicted for conspiring to defraud the United States by promoting and using a sham trust scheme. Joe Hill and Reeder were also indicted for conspiring to obstruct the grand jury investigation in the District of Wyoming by causing individuals to withhold records required to be produced by federal grand jury subpoenas. Joe Hill was indicted on four substantive counts of obstruction with respect to four individuals that he corruptly persuaded to withhold documents from the grand jury. The jury convicted Joe Hill, Kathy Hill and Reeder of all charges alleged in the indictment.
“Yesterday’s verdicts demonstrate that the Tax Division is committed to identifying abusive tax schemes and pursuing and prosecuting the promoters to the fullest extent of the law,” said Acting Assistant Attorney General Ciraolo.
The evidence at trial established that Joe Hill and Kathy Hill last filed a federal individual income tax return in 1994, while Reeder had not filed since 1985. None of the defendants paid any income taxes from those years to the present. Joe Hill and Kathy Hill operated the business Creative Consulting Group (CCG), which sold sham trusts that they claimed would reduce or eliminate an individual’s federal income tax liability. Essentially, the scheme involved assigning income to the trust by using a bank account in the trust’s name that was opened with a false federal tax identification number. The Hills, Reeder, and many other CCG clients who testified during the trial used the CCG trusts to conceal income and assets from the IRS. Kathy Hill and Reeder both had prior IRS assessments of income tax in the 1990s, which they never paid. To prevent the IRS from seizing their homes, they both used false liens to conceal the properties’ equity.
During 2007 through 2012, Joe Hill and Kathy Hill earned almost $500,000 in income through selling the CCG trusts, while Reeder earned more than $400,000 in income from insurance commissions and a travel business. Three trial witnesses who used the CCG trusts --Lawrence Paille, Amanda Campbell and Stephanie Maciel -- previously pleaded guilty to conspiracy to defraud the United States. The unreported income related to the scheme exceeded $2.7 million.
Chief U.S. District Judge Nancy D. Freudenthal set sentencing on Aug 6. The maximum penalty faced by each of the three defendants for conspiracy to defraud the United States is five years in prison and a $250,000 fine. For their convictions for conspiracy to obstruct an official proceeding, Joe Hill and Reeder each face a maximum sentence of 20 years in prison and a $250,000 fine.
“This verdict should send a clear message, promoting or participating in a fraudulent tax scheme is unacceptable; there is no secret formula that can eliminate a person's tax obligations,” said Special Agent in Charge Garza. “We owe it to every American taxpayer to investigate and prosecute individuals who participate in these fraudulent tax schemes.”
The case was investigated by special agents from the Cheyenne, Wyoming, and Denver, Colorado, offices of IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Todd I. Shugart and Eric J. Heimann of the U.S. Attorney’s Office for the District of Wyoming and Trial Attorney Lori A. Hendrickson of the Tax Division.