Insurance guy Ed lichtig finally shut down

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
MONDAY, NOVEMBER 24, 2008 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888

SAN FRANCISCO FEDERAL COURT HALTS SALES OF TAX SCHEMES

Walnut Creek, Calif., Firm Allegedly Helped Customers
Avoid Tax on More Than $25 Million Through Insurance and IRA Scheme

WASHINGTON - A San Francisco federal judge has ordered Edwin Lichtig III and his Walnut Creek, Calif.-based firm, GSL Advisory Solutions, to stop promoting unlawful tax schemes, the Justice Department announced today. The defendants agreed to the permanent injunction order without admitting the government’s allegations against them. The United States sued Lichtig and GSL alleging that they promoted tax fraud schemes involving Individual Retirement Accounts (IRAs) that helped customers improperly avoid federal income tax on more than $25 million.

According to the federal suit, Lichtig, a Lafayette, Calif., insurance salesman, promoted a scheme called PAT (Pension Asset Transfer). It allegedly helped customers improperly avoid income tax on untaxed assets held in their IRAs through the use of a series of transactions with sham businesses, self-employed retirement accounts and understatements of the value of life insurance policies. The government complaint said a second scheme called FROCO (Financed Roth Conversion Strategy) allegedly helped customers use annuities to transfer funds from their traditional IRAs to Roth IRAs without paying the proper amount of tax that is imposed on such transfers.

“Stopping tax fraud schemes involving misuse of retirement accounts is a high priority for the Justice Department’s Tax Division,” said Nathan J. Hochman, Assistant Attorney General for the Tax Division. “Since 2001, the Division has obtained injunctions against more than 360 tax return preparers and tax-fraud promoters.”

Hochman thanked Justice Department trial attorney Grayson Hoffman and Bill Maier of the Internal Revenue Service’s Small Business/Self Employed Division for their work on the case.

Information about the Justice Department’s Tax Division and its enforcement efforts is available on the Justice Department Web site.