DENVER - Jerold R. Sorensen, age 75, of Fresno, CA, was sentenced yesterday by U.S. District Court Judge Raymond P. Moore to serve 18 months in federal prison for obstructing and impeding the Internal Revenue Service, United States Attorney John F. Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced. Following his prison sentence, Sorensen was ordered to serve one year on supervised release. Sorensen was also ordered by Judge Moore to pay a fine of $100,000.00. The defendant was convicted by a jury on June 16, 2014, following a 6-day trial. The jury deliberated for nearly two hours before returning a verdict of guilty. Sorensen appeared at the sentencing hearing free on bond. He was ordered to report to a Bureau of Prisons facility within 15 days of designation.
Sorensen was indicted by a federal grand jury in Denver on Nov. 20, 2013. According to the indictment and evidence presented at trial, Sorensen was a resident of California and practiced dentistry and oral surgery through a California professional corporation, Jerold R. Sorensen, DDS, PC. Beginning in September of 2000 and continuing through May of 2008, in Colorado and elsewhere, the jury found that Sorensen obstructed and impeded the administration of the Internal Revenue laws.
Specifically, Sorensen worked with an entity known as Financial Fortress Associates, (“FFA"), an organization that promoted and advised its clients on schemes to avoid the payment of income and other federal taxes. Working through FFA, Sorensen established a number of Pure Trust Organizations (“PTOs") used as vehicles to help disguise Sorensen’s and his son’s receipt of business and personal income and asset ownership. Sorensen worked with Eva Melissa Sugar, an attorney in Denver, Colorado, who was associated with FFA, and he paid her to use an Unincorporated Business Organization (“UBO") called Northside Management (“Northside").
Sorensen acted as if the PTOs owned assets that he actually controlled, including his personal residence, his cars, the building where he conducted his dental practice, and the equipment used by that practice. He funneled income from his practice into the PTOs in an effort to reduce his taxable income. Furthermore, Sorensen took additional steps to substantially under-report his income to the IRS for calendar years 2002 through 2007. These steps included filing individual federal income tax returns which failed to report as income any of the millions of dollars deposited into the bank accounts he controlled and which he used for personal expenses. Personal expenses he paid using this unreported income included purchases of automobiles, property taxes, upkeep of his California residence, and over $2 million used to purchase land for and construct two additional homes and a commercial building in Utah. The defendant’s conduct caused approximately $2.3 million in tax loss.
Eva Melissa Sugar, the Denver attorney who helped facilitate the FFA scheme, pled guilty to conspiracy to defraud the United States in connection with the collection for taxes on August 5, 2014 and is scheduled to be sentenced on Oct. 29, 2014. Gregory Nathan Laurence of Germantown, Tennessee was sentenced on September 5, 2014 based on his plea of guilty to attempting to obstruct the administration of internal revenue laws.
“Sorensen participated in a scheme in an attempt to hid his income from the IRS to avoid paying taxes," said U.S. Attorney John Walsh. “The defendant has been held accountable for his illegal actions. Not only did he have to pay over $2 million in back taxes to the IRS, he also has to pay a $100,000 fine and spend a year and a half in federal prison."
“For those thinking about promoting or participating in abusive tax schemes should think twice; there is no secret formula that can eliminate a person's tax obligations." said Stephen Boyd, Special Agent in Charge for IRS Criminal Investigation, Denver Field Office. “We owe it to every American taxpayer to identify and prosecute both those who evade their taxes and those who promote and assist them in evading their tax obligations through fraudulent tax schemes."
This case was investigated by IRS Criminal Investigation with assistance from the Special Enforcement Program of the Internal Revenue Service.
The defendant is being prosecuted by Assistant U.S. Attorneys Matthew Kirsch, Pegeen Rhyne and Anna Edgar.
Source: U.S. Department of Justice, Office of the United States Attorneys
