If It’s Too Good To Be True, It Is – Tax Fraud

I’ve been an attorney for almost two decades, and I am always amazed, but never surprised, at how gullible some people, even supposedly smart people, like doctors and engineers, can be when it comes to estate planning and tax planning.

In U.S. v. Vallone, et al the founders and promoters of a complicated estate planning scheme were found guilty of conspiracy to commit fraud against the United States and were sentenced to prison terms ranging from 120 to 223 months. From the court opinion:

The trusts were marketed to and implemented for customers across the United States through a network of corrupt promoters, managers, attorneys, and accountants. Although prospective customers who bothered to seek independent advice as to the legitimacy of the Aegis system were routinely warned of its flaws, greed led many to overlook the system’s “too good to be true” attributes. Between 1994 and 2003, some 650 individuals purchased Aegis trust packages, at prices ranging from $10,000 to $50,000 or more. The diverse clientele included real estate brokers, doctors, public officials, and a variety of small-business owners. Among the purchasers was a co-founder of the Hooters restaurants chain, Lynn “L.D.” Stewart, who himself was later charged with tax evasion, although the charges were dismissed after his trial resulted in a hung jury. (Others were not so lucky; some Aegis clients were convicted and sent to prison.) The thousands of false income tax returns that were filed based on the use of the Aegis trusts are estimated to have cost the federal government more than $60 million in tax revenue.

Just like there are no legitimate get rich quick strategies, there are no legitimate pay-no-taxes strategies. If someone says he has a one, kick him out of your office or home and lock the door. Snake oil salesmen are still around. Sometimes they look like attorneys and accountants.