Four people have been accused of conspiring to deceive the Internal Revenue Service (IRS) as part of a purported nationwide abusive-trust tax shelter scheme, in a latest episode in an ongoing judicial saga. This comes after the prior indictments of two people connected to the same plot. The accusations cover a number of years’ worth of activities and show a sophisticated network of dishonesty intended to avoid paying federal income taxes.
The Allegations
A federal grand jury in Denver delivered the superseding indictment, which charges Suzanne Thompson, Weldon Wulstein, Marcia Predmore, and Roderick Prescott with working together with Larry Conner and Timothy McPhee, among others, to market, advertise, and carry out the abusive-trust tax shelter scheme. These purportedly took place between February 2018 and September 2023, and they involved strategies meant to avoid paying taxes on substantial amounts of revenue.
Promotion of the Scheme
The Stewardship Institute, a company owned by Roderick Prescott, was instrumental in the program’s marketing. It has been claimed that Prescott promoted the tax shelter’s “private family foundation” feature, portraying it as the last phase. He taught clients how to use the foundation to pass off private transactions as charity contributions in workshops he hosted with Conner, McPhee, and other participants.
Implementation and Facilitation
It is alleged that Weldon Wulstein and Suzanne Thompson actively participated in the scheme’s execution. Clients involved in the tax shelter received bookkeeping services from Thompson, who ran The CFO Agency, and fake tax returns were produced on their behalf by Wulstein, who ran Wulstein Financial Services. According to allegations, these activities made it easier to evade paying taxes and conceal income.
Sham Trusts and False Returns
The use of fictitious trusts and a fictitious “private family foundation” to hide income from taxes was at the heart of the plot. Conner and McPhee gave their customers instructions on how to transfer their business profits to these organizations, giving the impression that the money was not really theirs. The true nature of the revenue was further concealed by false tax returns submitted by carefully chosen preparers such as Thompson and Wulstein, which led to a large amount of unpaid federal income taxes.
Understanding the Abusive-Trust Tax Shelter Scheme
Tax shelter schemes are financial arrangements designed to minimize tax liability by exploiting gaps, loopholes, or ambiguities in tax laws. In the case described, the abusive-trust tax shelter scheme involved the use of sham trusts and a purported “private family foundation” to conceal income from taxation. Clients were instructed to assign their business income to these entities, creating the appearance that the income did not belong to them. False tax returns prepared by designated preparers further obscured the true nature of the income, resulting in significant unpaid federal income taxes. This scheme exploited complexities in tax laws to artificially reduce tax liabilities, ultimately leading to allegations of fraud and evasion.
Consequences and Penalties
The defendants in this case may be subject to severe penalties under federal law if found guilty. The maximum term for someone found guilty of planning to defraud the United States is five years in jail. Furthermore, each of Conner, McPhee, Thompson, and Wulstein could get a maximum term of three years in prison for their respective roles in the preparation of a fake tax return. Likewise, the maximum term for McPhee and Predmore—who are linked to tax evasion—is five years in prison for each conviction. It’s crucial to remember that a federal district court judge will ultimately decide on punishments, taking into account several statutory issues as well as the U.S. Sentencing Guidelines.
Investigation and Prosecution
The investigation into this complex tax shelter scheme is being conducted by IRS Criminal Investigation. Prosecution is being led by Trial Attorneys Amanda R. Scott and Lauren K. Pope, along with Senior Litigation Counsel Corey J. Smith of the Justice Department’s Tax Division. Their efforts highlight the commitment to holding accountable those who engage in illegal tax evasion schemes.
The ongoing efforts to bring complex financial crimes to justice are evidenced by the indictment of four more people in relation to a purported nationwide abusive-trust tax shelter scheme. Individuals who are accused will have the chance to refute the accusations as the court proceedings progress. All the same, the claims are a clear warning about the repercussions of trying to avoid paying taxes by any means possible.
