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| Tax Law - Tax fraud promoters
sentenced to jail for falsely promising phoney tax
schemes |
PRESS RELEASE -
PROSECUTIONS |
| Submitted: 8:59 AM,
Wednesday, June 8, 2005 |
US Attorney - 8 June - LAWFUEL - The Law News
Network - Five individuals associated with a tax fraud group
known as "We the People" have been sentenced to federal prison
for promoting bogus tax shelters that falsely promised to
limit exposure to federal income taxes.
The leader of
the operation, Lynne Meredith, 55, of Sunset Beach, was
sentenced yesterday to 121 months in prison. A federal jury
last year convicted Meredith of conspiracy, four counts of
mail fraud, two counts of using a false social security
number, making a false statement in a passport application and
five counts of failing to file a tax return.
Meredith
and her co-defendants were sentenced Monday afternoon in Los
Angeles by United States District Judge Dean D. Pregerson. In
sentencing Meredith, Judge Pregerson called her ideas on
United States tax laws were "delusional." He went on to say
that the defendants were motivated by greed, and that the
stiff sentences in the case were warranted by the serious harm
the defendants caused to their customers and to government
institutions. Judge Pregerson also noted the importance of
deterring other tax protest organizations that mislead
taxpayers into violating tax laws.
The evidence
presented during a 13-week trial showed that beginning in 1991
and continuing until April 2002, Meredith conducted seminars
at which she sold books and bogus "pure trusts" to people with
the purpose of leading them to believe they could legally
shield income and assets from taxation. Meredith and her
co-defendants encouraged and assisted taxpayers by forming
phony "pure trusts," opening bank accounts with phony Taxpayer
Identification Numbers, filing fraudulent income tax returns
and encouraging taxpayers to stop filing income tax returns.
We the People sold the "pure trusts" for approximately
$500 to $1,000 at seminars that were held throughout the
United States and internationally. To entice potential "trust"
purchasers at seminars, Meredith said that each "trust" was
customized for the particular customer, who would retain
complete control over their businesses and assets placed in
trust without incurring any tax liability.
Meredith
also encouraged taxpayers to file frivolous tax returns that
falsely reported that taxpayers did not have any taxable
income and fraudulently requested a refund of all income taxes
paid. The defendants also encouraged taxpayers to send protest
correspondence to the IRS for the purpose of impeding and
obstructing the IRS from collecting taxes owed by them.
Meredith wrote books, including How To Cook A Vulture
and Vultures In Eagle's Clothing, in which she falsely claimed
that individuals could lawfully stop paying income taxes, stop
their employers from withholding income taxes, and refuse to
produce books and records to the IRS. The books contained
examples of frivolous tax returns and protest letters. After
the indictment, Meredith was featured as a leader of the tax
protest movement in segments 20/20 and the NBC Nightly News,
as well as in articles in People Magazine and the Los Angeles
Times.
The defendants falsely told their customers
that paying taxes is "voluntary," and that they could file a
W-4 or W-8 form with their employer claiming to be exempt from
federal income tax withholdings. In fact, under federal law,
anyone who earns income more than approximately $8,000 must
file a tax return and pay taxes. Those customers who purchased
and used the "pure trusts" to hide income face serious
financial penalties and interest for the income taxes they
failed to pay.
From 1991 until 2002, Meredith caused
thousands of taxpayers to file fraudulent income tax returns
with the IRS. Those fraudulent tax returns sought refunds for
as much as $32,822.
The jury heard evidence that
Meredith and her co-conspirators earned more than $8.5 million
as a result of the scheme. Meredith did not file federal
income tax returns during these years, and she did not pay any
federal income taxes. Furthermore, none of the other
defendants in the case filed or paid any income taxes on
income they earned from the scheme.
The other
defendants in the case are:
Gayle Bybee, 57, of Sunset
Beach, who received a prison sentence of 60 months. Bybee was
convicted of conspiracy and three counts of failing to file a
tax return.
Gregory Paul Karl, 55, of Solana Beach,
who was sentenced to 20 months in prison. Karl, a former CPA,
was convicted of conspiracy and four counts of mail fraud.
Teresa Manharth Giordano, 42, of Murrieta, who was
sentenced to 40 months in prison. Giordano was convicted of
conspiracy, four counts of mail fraud and two counts of
failing to file a tax return.
Willie Watts, 46, of
Murrieta, who was sentenced to 36 months in prison. Watts, a
former CPA, was convicted of conspiracy, three counts of mail
fraud and three counts of failing to file a tax return.
Two more defendants in the case - Nora Moore, 56, of
Huntington Beach, and Betty Erickson, 60, of Windsor - are
scheduled to be sentenced by Judge Pregerson on June 20. Both
Moore and Erickson were convicted of three counts of failing
to file a tax return.
The prosecution of this case
reflects the increased focus the IRS has on the anti-tax
movement. Although courts have continuously rejected frivolous
arguments such as those presented by Meredith, the use of
false, misleading and unorthodox tax advice has gained
followers.
The case against Meredith and the other
promoters of We the People was the result of an investigation
by IRS-Criminal Investigation Division.
CONTACT:
Assistant United States Attorney Alicia Villarreal
(213)
894-3172
Assistant United States Attorney Brian
Hershman
(213) 894-5796
Read
all today’s law announcements here»
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