FOR IMMEDIATE RELEASE FRIDAY, MAY 16, 2003 WWW.USDOJ.GOV TAX (202) 514-2008 TDD (202) 514-1888 WASHINGTON, D.C. - Assistant Attorney General Eileen J. OConnor of the Tax Division announced that a federal jury in Salt Lake City convicted Glenn Ambort, John Benson, and Nona Egbert of conspiracy to defraud the Internal Revenue Service and 69 counts of aiding in the preparation of false tax returns. A fourth defendant, William Lewis, was convicted of 28 counts of assisting in the preparation of false tax returns. The trial began May 5, 2003, before U.S. District Judge Dee Benson.
The Justice Department and the IRS will identify the promoters of fraudulent tax schemes and hold them accountable, said Assistant Attorney General Eileen J. OConnor. Honest taxpayers deserve to know that tax criminals will be prosecuted. According to trial evidence, from about January to November 1992, the defendants promoted a scheme to get refund checks from the IRSs Philadelphia Service Center. The center receives all international tax returns, including U.S. Nonresident Alien Income Tax Returns (Forms 1040NR), which non-resident aliens use each year to report their U.S. tax liability. The governments trial evidence showed that under the name Association de Libertas, or ADL, defendants Ambort and Benson conducted three-day seminars across the country advocating that only minorities, labeled as 14th Amendment citizens, had to pay taxes. Furthermore, ADL taught that other U.S. citizens, so-called Sovereign State Citizens, had been tricked into paying taxes and were entitled to a refund of three years worth of income, social-security and medicare taxes by filing a Form 1040NR with the Philadelphia center.
Evidence introduced during the trial showed that more than $3.8 million in false tax refund claims were filed by ADL members living within the IRSs Ogden (Utah) Service Center geographical boundaries; defendants Egbert and Lewis promoted the scheme in Utah.
According to the trial evidence, as part of the conspiracy, the defendants conducted seminars in Utah, as well as California, Colorado, Florida, Georgia, Louisiana, Nevada, North Carolina, Oregon, Pennsylvania, Texas and Washington. For a fee of $1,500, instructors presented a deliberately false interpretation of the income tax code that supported a claim that white U.S. citizens were really non-resident aliens who owed no taxes. Participants were then shown how to fill out Amended U.S. Individual Income Tax Returns (Forms 1040X) and Forms 1040NR to obtain a tax refund from the IRS. Participants in the ADL scheme were required to split any refund with the organization through a designated escrow agent. Six defendants were indicted Apr. 15, 1998, but the trial was delayed during two pre-trial appeals filed by the defendants. The two other defendants, Merrill Hansen and Steven Stay, pleaded guilty prior to todays convictions.
The crime of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, carries a maximum penalty of five years in prison and a $250,000 fine. The crime of aiding and assisting in the preparation of false income tax returns in violation of 26 U.S.C. § 7206(2) carries a maximum penalty of three years in prison, and a $250,000 fine.
Special agents with IRS Criminal Investigation conducted the investigation. Tax Division trial attorneys Brian D. Bailey and Brett A. Sagel prosecuted the case.
Anyone who has information about suspected tax fraud should report it to the IRS tip line at 1-800-829-0433. 03-299
Source: US Department of Justice
