FOR IMMEDIATE RELEASE FRIDAY, FEBRUARY 14, 2003 WWW.USDOJ.GOV TAX (202) 514-2007 TDD (202) 514-1888 WASHINGTON, D.C. A federal judge in Cincinnati today ordered accountant Robert C. Welti of Ripley, Ohio, to stop preparing federal income tax returns and to stop interfering with IRS audits of his customers. Judge Susan J. Dlott adopted the report and recommendation of Magistrate Judge Timothy S. Hogan finding that Welti prepared tax returns based upon the false and fraudulent position that taxpayers can avoid their tax obligations by using sham "trusts" and that Welti used frivolous arguments and diversionary tactics to obstruct IRS audits of his customers. Judge Dlott's order requires Welti to turn a list of his customers over to the IRS and bars him from engaging in "conduct that substantially interferes with the proper administration and enforcement of the internal revenue laws." "Today's order is a victory for honest taxpayers," said Eileen J. O'Connor, Assistant Attorney General for the Department of Justice's Tax Division. "The Justice Department will take the actions necessary to shut down return preparers who enrich themselves by using sham-trust schemes to help their customers cheat on their taxes." According to court papers filed by the Justice Department, Welti prepared hundreds of tax returns based upon sham trusts promoted by the Cincinnati-based HG Asset Management Company, cheating honest taxpayers out of more than $3 million.
Last week, the Justice Department sued to stop two other Ohio men - Wilson Graham and Homer Richardson - from selling sham trusts. In court papers filed in that case, the Department alleged that Richardson did business under the name HG Asset Management Company. More information on the suit is available at http://www.usdoj.gov/tax/03_tax_072.htm.
Tax evasion scams, including fraudulent tax return preparation, cost taxpayers billions of dollars every year. According to a General Accounting Office report (GAO-02-733) issued last year, however, stepped-up efforts by the IRS and Justice Department to crack down on these scams have led to increasing numbers of convictions of tax fraud promoters. The report can be found online at http://www.gao.gov/new.items/d02733.pdf. 03-094
Source: US Department of Justice
