DOJ goes after FL asset protection scam

[Demosthenes]

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FOR IMMEDIATE RELEASE TAX
WEDNESDAY, AUGUST 5, 2009 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888
JUSTICE DEPARTMENT SEEKS TO BAR COUPLE’S “ASSET-PROTECTION” SCHEME ALLEGEDLY OPERATED FROM FLORIDA AND BAHAMAS
Offshore Scheme Allegedly Helped Wealthy Owners Hide Some $28 Million of Income From Businesses—including Michigan- and Illinois-Based Cyberporn Firms
WASHINGTON – The United States has filed a lawsuit to bar a married couple’s alleged nationwide tax fraud scheme involving so-called asset protection, the Justice Department announced today. The civil injunction lawsuit, filed in U.S. District Court in the Southern District of Florida, alleges that Byron Denver Hatcher and his wife, Kim Reinhart, helped customers hide their assets and business income through multiple transactions using a series of sham foreign trusts, sham foreign corporations and sham trustees.
The scheme allegedly created the illusion that a customer’s business was based and owned overseas, when in fact the customer continued to operate and own the business in the United States. The lawsuit alleges that Hatcher and Reinhart falsely told customers that these transactions made the customers’ income not subject to U.S. income tax.
According to the complaint, at least 40 current scheme participants located all over the United States, and in Canada, Europe, Asia and Australia use the asset-protection scheme to hide their income and assets. Defendants’ customers allegedly include a motorcycle-parts business in Hollister, Calif.; an air-pollution-control-systems business in Elkton, Fla.; two auto-repair businesses in Ferndale, Wash.; two backyard deck and spa businesses in Fort Pierce, Fla. and Chicago; a medical receivables business in California; a race-horse business in Nevada; and two Internet pornography businesses based in Illinois and Michigan.
The suit further alleges that between 2000 and 2005, these participants funneled approximately $28 million through defendants’ scheme, causing an estimated $4.3 million loss to the U.S. Treasury. The government asked the court to require the defendants to stop the scheme and turn over financial records documenting scheme transactions. The suit says that for Hatcher and Reinhart, the term “asset protection” is a euphemism for “tax fraud.”
“The Justice Department and Internal Revenue Service are working vigorously to stop tax fraud schemes and detect those who use them,” said John A. DiCicco, Acting Assistant Attorney General for the Justice Department’s Tax Division.

According to the government complaint, Hatcher and Reinhart reside in and operate the scheme from both Florida and the Bahamas.
The complaint states the couple were convicted of bank fraud in a Florida state court in 1993. A Florida federal judge found the couple in contempt of court in 2002 for helping a Rockford, Ill., man violate an injunction that barred him from sending spam advertising for his cyberporn business to America Online subscribers.

In the past decade the Tax Division has obtained injunctions against more than 410 tax preparers and tax-fraud promoters. Information about these cases is available on the Justice Department Web site.

[Quixote]

A Florida federal judge found the couple in contempt of court in 2002 for helping a Rockford, Ill., man violate an injunction that barred him from sending spam advertising for his cyberporn business to America Online subscribers.

If facilitating spam were the hanging offense in ought to be, there'd be two fewer scammers out there.