US Justice Department Sues Sham Trust Promoters

by Glen Shapiro, LawAndTax-News.com, New York

08 March 2006

The US Justice Department announced on Monday that it has sued two Las Vegas-based promoters of an alleged sham-trust tax scheme.

The DoJ's complaint alleges that the scheme in question has caused an estimated $31 million in losses to the Treasury.

The suit alleges that Reinhold Sommerstedt and Daniel Young of Las Vegas sold sham-trust packages to customers for as much as $14,500 and helped their customers hide their income from the IRS in Caribbean bank accounts.

The defendants’ customers allegedly used phony loans and gifts to repatriate their money while concealing their income from the IRS.

Also named in the suit are Lynn Lakers, a Boulder City, Nevada tax-return preparer who allegedly prepared false tax returns for the phony trusts used in the scheme, and Stephen Nestor of Boise, Idaho, a former IRS revenue officer who allegedly signed tax returns on behalf of the bogus trusts.

“The Department of Justice is firmly committed to shutting down fraudulent trust schemes that cost the treasury and law-abiding taxpayers millions of dollars each year,” Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division stated in relation to the case.

Recommended