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Quatloos! > Investment Fraud > Multi-Level Marketing > EXHIBIT: Global Prosperity Group

EXHIBIT: Global Prosperity Group/
Investors International (IGP)

Introduction

At the bottom of multi-level marketing -- a scummy business at best -- lurks Global Prosperity. The slimy-est of the slimy, Global Prosperity marks the absolute rock-bottom low of the MLM programs. There simply is no MLM program which is more of a scam, or has such a disreputable background, as Global Prosperity and its many equally-sordid spin-offs.

The people associated with GPG are the bottom of the bottom, too. Many of the people have criminal pasts, others are lifelong network marketers. In other words, you have to be a total scumbug to be affiliated with GPG -- that is, creating relationships with hardened criminals and a programs which has a reputation for scamming young and old, rich and poor alike. If somebody actually admits they are in Global Prosperity, you know you are dealing with a lowlife, so run!

Global Prosperity's reputation is so bad that other network marketers will often add a disclaimer to the bottom of their own spams and advertisements which says "Not Global Prosperity" -- now that is pretty bad! And Global Prosperity really had to work at being the Black Sheep of the multi-level marketing industry, which is like being the really dislikeable guy in a lineup of child molesters.

Global Prosperity Group ("GPG") was formed by a scam artist named Keith Anderson formerly of Tulsa, Oklahoma (before he fled the United States). Essentially, Anderson put together a bogus "three-tiered" trust system, relying heavily on discredited tax protestor theories and whatever common law terms he could pick up out of Black's Law Dictionary (a generic reference source for 1st year law students and paralegals, but not much else). Anderson then took this trust system and began to market it, multi-level style, by creating different tiers of membership in GPG, and with people awarded only when they -- or someone in their "downline" brought in some new sucker who purchased the GPG materials.

The GPG trust system being absolutely bogus, Anderson relied on the MLMers who flocked to GPG reading "scripts" (prepared speeches to be read over the phone to new prospects) as well as audiotapes and a bunch of glossy materials which would have been laughed at by any tax attorney or legal academician. But, by powerful marketing and PROMISES that people who sold GPG would go on to great riches, GPG blossomed and literally thousands of completely-worthless trusts were created, mostly in the early 1990s.

By the mid-1990s however, only a Anderson and a few of the people at the top of the GPG hierarchy made any money, and many people at the lower levels were left being prosecuted for tax evasion and trying to figure out how to get their money out of bank debenture programs and other bogus investments promoted by GPG.

Then, GPG splintered into a bunch of equally bogus programs, most notably Global Prosperity 2000 (GPG2000), Global Prosperity 2001 (GPG2001), Investors Alliance, Financial Legacy Alliance, and others. All of these program follow essentially the same recipe: Selling bogus trust or other questionable legal structures and investments, selling "memberships" to be able to sell to your friends and family and whatever suckers you come across, by reading carefully drafted scripts and sending out audiotapes, and of course aiding and abetting tax evasion and securities fraud, depending on the time of day.

Soon after the collapse of GPG, even Keith Anderson admitted that "Big Mistakes" had been made in that program. Nonetheless, within a couple of years some of the old leaders of GPG had banded back together, and despite the fact that the original GPG was a complete bust that left many people scammed and other being prosecuted for tax evasion, GPG is back on track (?) holding overpriced seminars, spamming the internet with "offshore opportunity" and reading scripts to suckers over the phone.

Go figure. The first time GPG went around, it was probably easy to be suckered into the newness of it all. But to get suckered into GPG this second time around, well you'd have to be a real fool.

So what does GPG sell? Well, mostly they sell seminars which tell you how you can sell their seminars to others. Which is funny, because the GPG seminars do little more than promote so-called Pure Trusts (a quick ticket to lose your wealth in IRS fines and penalties, and perhaps even spend some Club Fed time) and various shady investments in condos, etc.

From our April 2000 Newsletter

Speaking of abusive trusts, lately there has been a resurgence of the old "Global Prosperity Group", a group which offered Pure Trusts (a sham trust sold by scam artists) and unreported Offshore Trusts (deemed to be tax evasion by the IRS) on a multi-level marketing basis.

GPG, as it was known, is a version of an MLM scam known as the "aussie-2-up", basically because it offers two levels to which a network marketer could climb if they scammed enough people OR that suckers who mistakenly thought the GPG seminars and materials were valuable, could buy into.

GPG was famous for suggestions that its network marketers spam e-mails like crazy, advertise in newspapers, etc., and then when a prospective dupe would call, a long "script" would be read over the telephone which extolled the virtues of GPG as a tax-free "business opportunity" that would lead many to riches.

And lead it did, but not to riches. GPG proved to be a notoriously difficult program for people to sell, because most people didn't want to commit tax evasion. Still, by sheer persistence the program sold into the tens-of-thousands, only perhaps a dozen or less were destined to walk away net ahead, the others losing big in thousands of dollars in bogus seminars and materials, not to mention lost time.

Even worse, as GPG progressed, many people took advantage of the people in it by getting them into bank debenture roll programs, historical bonds, and all sorts of other fraudulent investments, where the investors didn't even get a dime back. Many of these schemes were later busted up the SEC, and the rest simply didn't pay.

GPG finally collapsed around 1997, with 99% of the people in it being utterly disgusted with the lies and lost investments. But like any bad social disease, GPG kept coming back, in the form of some equally fraudulent programs known respectively as "Global Prosperity 2000," "Global Prosperity 2001", "Investors Alliance", and several other similar programs - all lead of course by former GPG leaders, who were as shameless about telling blatant lies in the marketing of these programs as they were with GPG.

The history of GPG and its spin-off programs is a lesson in sham programs, and how the idea of "tax free offshore trusts" and multi-level marketing can blend together to make a nightmare for those involved. We cover the GPG scam at http://www.quatloos.com/groups/gpg.htm

Lately, we have seen a resurgence of one of the spin-off groups, Global Prosperity 2001, which has apparently been given overpriced seminars in the Caribbean again. This is amazing, giving GPG's proven track record of being both fraudulent and notoriously difficult to sell (bad amongst other MLM programs!). So, we will wait again for the inevitable cease-and-desist order and prosecutions.

If you are approached to buy into any GPG spin-off group, just tell them that you're not interested - and that they can "shove" their scripts.

Offshore Trusts and Accounts Must Be Reported

Though GPG claims that its trusts are somehow special because they involve "three tiers" and not just one, they are special only in that it is easy for the IRS to identify these trusts as a tax evasion scheme.

If an offshore trust is created for you then you MUST report it. You may be fed some theories about why you need not report it, but these are bull. The Global Prosperity Group "plan" was created before the passage in August of 1996 of the Small Business Protection Act, and as such is outdated. NOW, if you are a US citizen you MUST report to the IRS every offshore trust to which you have any connection, and anyone who tells you differently is a liar. Moreover, the fact that they tell you that you don't have to report is NOT a defense to civil and criminal liability.

The IRS has recently started to crackdown on unreported offshore trusts, and has issued numerous warnings about these. From the IRS Criminal Investigative Division (CID), at http://www.treas.gov/irs/ci/tax_fraud/trusts.htm

Fraudulent Foreign and Domestic Trusts

Promoters of abusive trusts can lead innocent taxpayers to financial ruin.

The bottom line: "Don't Buy In!"

What Is An Abusive Trust?

Establishing a foreign or domestic trust for the purpose of hiding income and assets from taxation is illegal. Abusive Trust Schemes typically involve the creation of one or more trusts into which the taxpayer transfers his or her personal and/or business assets and to which the taxpayer assigns his or her income. The taxpayer, the promoter, or someone who will allow the taxpayer in reality to control the activities of the trust is then assigned as the trustee.

The Facts About Trusts

  • A trust is a form of ownership which completely separates responsibility and control of assets from all the benefits of ownership

  • Trusts are used in such matters as estate planning; to facilitate the genuine charitable transfer of assets; and to hold assets for minors and those unable to handle their financial affairs

  • All trusts must comply with the tax laws as set forth by the Congress in the Internal Revenue Code, Sections 641-683

  • Violations of the Internal Revenue Code may result in civil penalties and/or criminal prosecution

    • Civil sanctions can include a fraud penalty up to 75% of the underpayment of tax attributable to the fraud in addition to the taxes owed

    • Criminal convictions may result in fines up to $250,000 and/or up to five years in prison for each offense

  • Taxpayers are responsible for payment of their taxes as set forth by Congress regardless of who prepares their return

IRS Issues Warning

Income cannot be shifted to another entity for tax purposes and must be reported by the individual who earned it. In addition, personal living expenses which were not deductible prior to the creation of a trust are not deductible by virtue of assignment of assets and income to a trust. No matter how carefully the trust documents are drafted, if the intent of the trust is to avoid taxes, the trust will be treated as a sham.

In April 1997, the Internal Revenue Service issued Notice 97-24 and Information Release 97-19 warning taxpayers to avoid abusive trust schemes that promise bogus tax benefits, and to take steps to correct past participation in such trusts.

IRS Notice 97-24

Citations: Notice 97-24, 1997-16 IRB 1

Tax Analysts Reference: 97 TNT 65-1

Code Section: Section 671 -- Grantors as Owners

Institutional Author: Internal Revenue Service

______________________________________________

IRS Warns Of Abusive Trusts

The IRS has issued an alert to taxpayers (Notice 97-24) about trust arrangements that purport to reduce or eliminate federal taxes in ways that are not permitted by law (abusive trust arrangements).

CERTAIN TRUST ARRANGEMENTS

====== SUMMARY ======

The IRS has issued an alert to taxpayers (Notice 97-24) about trust arrangements that purport to reduce or eliminate federal taxes in ways that are not permitted by law (abusive trust arrangements).

The trust arrangements that concern the IRS ignore the true ownership of assets or the substance of transactions. According to the IRS, promoters of the arrangements claim that they allow the owners to retain full benefit of business or personal assets but reduce or eliminate taxes. The arrangements often involve more than one trust; for example, a person may put business assets in an unincorporated business trust, transfer business equipment to an equipment trust, place his home in a family residence trust, and set up a foreign trust to hold the other trust units and to receive trust income. The notice contains five examples of the arrangements.

The IRS warns taxpayers to be suspicious of arrangements that claim to make personal living expenses deductible, to create charitable deductions for payments benefiting the transferor or family, or that otherwise result in an individual having to pay no tax with no change in control over the assets.

The IRS says promoters of the arrangements advertise "investment seminars" or "tax seminars" in local media and the Internet. The trusts, says the IRS, may have names that refer to constitutional issues, fairness, equity, or patriotic themes, but often have names that are similar to common business organizations and nonabusive trusts. The Service encourages individuals who have participated in abusive trust arrangements to file correct tax returns for 1996, as well as amended returns for prior years.

====== FULL TEXT ======

Communications Division

Part III - Administrative, Procedural, and Miscellaneous

Notice 97-24

[1] This notice is intended to alert taxpayers about certain trust arrangements that purport to reduce or eliminate federal taxes in ways that are not permitted by federal tax law. (The notice refers to such arrangements as "abusive trust arrangements." See Section I. ABUSIVE TRUST ARRANGEMENTS - IN GENERAL, below.) The notice describes some typical abusive trust arrangements, as well as the tax benefits promised by promoters, and then explains the correct tax principles that apply to these trust arrangements. Taxpayers should be aware that abusive trust arrangements will not produce the tax benefits advertised by their promoters and that the Internal Revenue Service is actively examining these types of trust arrangements as part of the National Compliance Strategy, Fiduciary and Special Projects. Furthermore, in appropriate circumstances, taxpayers and/or the promoters of these trust arrangements may be subject to civil and/or criminal penalties.

[2] This notice should not, however, create concerns about the legitimate uses of trusts. For example, trusts are frequently used properly in estate planning, to facilitate the genuine charitable transfer of property, and to hold property for minors and incompetents.

[3] Under the federal tax laws, trusts generally are separate entities subject to income tax (except for certain charitable or pension trusts that are expressly exempted by the tax laws and certain grantor trusts described in sections 671 - 679 of the Internal Revenue Code). Under these laws and certain court developed doctrines, either the trust, the beneficiary, or the transferor, as applicable, must pay the tax on the income realized by the trust including the income generated by property held in trust.

I. ABUSIVE TRUST ARRANGEMENTS - IN GENERAL

[4] Abusive trust arrangements typically are promoted by the promise of tax benefits with no meaningful change in the taxpayer's control over or benefit from the taxpayer's income or assets. The promised benefits may include reduction or elimination of income subject to tax; deductions for personal expenses paid by the trust; depreciation deductions of an owner's personal residence and furnishings; a stepped-up basis for property transferred to the trust; the reduction or elimination of self-employment taxes; and the reduction or elimination of gift and estate taxes. These promised benefits are inconsistent with the tax rules applicable to the abusive trust arrangements, as described below.

[5] Abusive trust arrangements often use trusts to hide the true ownership of assets and income or to disguise the substance of transactions. These arrangements frequently involve more than one trust, each holding different assets of the taxpayer (for example, the taxpayer's business, business equipment, home, automobile, etc.), as well as interests in other trusts. Funds may flow from one

trust to another trust by way of rental agreements, fees for services, purchase and sale agreements, and distributions. Some trusts purport to involve charitable purposes. In some situations, one or more foreign trusts also may be part of the arrangement.

II. EXAMPLES OF ABUSIVE TRUST ARRANGEMENTS

[6] Described below are five examples of abusive trust arrangements that have come to the attention of the Internal Revenue Service. An abusive trust arrangement may involve some or all of the trusts described below. The type of trust arrangement selected is dependent on the particular tax benefit the arrangement purports to achieve. In each of the trusts described below, the original owner of the assets that are nominally subject to the trust effectively retains authority to cause the financial benefits of the trust to be directly or indirectly returned or made available to the owner. For example, the trustee may be the promoter, or a relative or friend of the owner who simply carries out the

directions of the owner whether or not permitted by the terms of the trust. Often, the trustee gives the owner checks that are pre-signed by the trustee, checks that are accompanied by a rubber stamp of the trustee's signature, a credit card or a debit card with the intention of permitting the owner to obtain cash from the trust or otherwise to use the assets of the trust for the owner's benefit.

1. THE BUSINESS TRUST.

[7] The owner of a business transfers the business to a trust (sometimes described as an unincorporated business trust) in exchange for units or certificates of beneficial interest, sometimes described as units of beneficial interest or UBI's (trust units). The business trust makes payments to the trust unit holders or to other trusts created by the owner (characterized either as deductible business expenses or as deductible distributions) that purport to reduce the taxable income of the business trust to the point where little or no tax is due from the business trust. In addition, the owner claims the arrangement reduces or eliminates the owner's self-employment taxes on the theory that the owner is receiving reduced or no income from the operation of the business. In some cases, the trust units are supposed to be canceled at death or "sold" at a nominal price to the owner's children, leading to the contention by promoters that there is no estate tax liability.

2. THE EQUIPMENT OR SERVICE TRUST.

[8] The equipment trust is formed to hold equipment that is rented or leased to the business trust, often at inflated rates. The service trust is formed to provide services to the business trust, often for inflated fees. Under these abusive trust arrangements, the business trust may purport to reduce its income by making allegedly deductible payments to the equipment or service trust. Further, as to the

equipment trust, the equipment owner may claim that the transfer of equipment to the equipment trust in exchange for the trust units is a taxable exchange. The trust takes the position that the trust has "purchased" the equipment with a known value (its fair market value) and that the value is the tax basis of the equipment for purposes of claiming depreciation deductions. The owner, on the other hand, takes the inconsistent position that the value of the trust units received cannot be determined, resulting in no taxable gain to the owner on the exchange. The equipment or service trust also may attempt to reduce or eliminate its income by distributions to other trusts.

3. THE FAMILY RESIDENCE TRUST.

[9] The owner of the family residence transfers the residence, including its furnishings, to a trust. The parties claim inconsistent tax treatment for the trust and the owner (similar to the equipment trust). The trust claims the exchange results in a stepped-up basis for the property, while the owner reports no gain. The trust claims to be in the rental business and purports to rent the residence back to the owner; however, in most cases, little or no rent is actually paid. Rather, the owner contends that the owner and family members are caretakers or provide services to the trust and, therefore, live in the residence for the benefit of the trust. Under some arrangements, the family residence trust receives funds from other trusts (such as a business trust) which are treated as the income of the trust. In order to reduce the tax which might be due with respect to such income (and any income from rent actually paid by the owner), the trust may attempt to deduct depreciation and the expenses of maintaining and operating the residence.

4. THE CHARITABLE TRUST.

[10] The owner transfers assets to a purported charitable trust and claims either that the payments to the trust are deductible or that payments made by the trust are deductible charitable contributions. Payments are made to charitable organizations; however, in fact, the payments are principally for the personal educational, living, or recreational expenses of the owner or the owner's family. For example, the trust may pay for the college tuition of a child of the owner.

5. THE FINAL TRUST.

[11] In some multi-trust arrangements, the U.S. owner of one or more abusive trusts establishes a trust (the "final trust") that holds trust units of the owner's other trusts and is the final distributee of their income. A final trust often is formed in a foreign country that will impose little or no tax on the trust. In some arrangements, more than one foreign trust is used, with the cash flowing from one trust to another until the cash is ultimately distributed or made available to the U.S. owner, purportedly tax free.

III. LEGAL PRINCIPLES APPLICABLE TO TRUSTS

[12] As noted above, when trusts are used for legitimate business, family or estate planning purposes, either the trust, the trust beneficiary, or the transferor to the trust, as appropriate under the tax laws, will pay the tax on the income generated by the trust property. When used in accordance with the tax laws, trusts will not transform a taxpayer's personal, living or educational expenses into deductible items, and will not seek to avoid tax liability by ignoring either the true ownership of income and assets or the true substance of transactions. Accordingly, the tax results that are promised by the promoters of abusive trust arrangements are not allowable under federal tax law. Contrary to promises made in promotional materials, several well-established tax principles control the proper tax treatment of these abusive trust arrangements.

1. SUBSTANCE -- NOT FORM -- CONTROLS TAXATION.

[13] The Supreme Court of the United States has consistently stated that the substance rather than the form of the transaction is controlling for tax purposes. See, for example, Gregory v. Helvering, 293 U.S. 465 (1935), XIV-1 C.B. 193; Helvering v. Clifford, 309 U.S. 331 (1940), 1940-1 C.B. 105. Under this doctrine, the abusive trust arrangements may be viewed as sham transactions, and the IRS may ignore the trust and its transactions for federal tax purposes. See Markosian v. Commissioner, 73 T.C. 1235 (1980) (holding that the trust was a sham because the parties did not comply with the terms of the trust and the supporting documents and the relationship of the grantors to the property transferred did not differ in any material aspect after the creation of the trust); Zmuda v. Commissioner, 731 F.2d 1417 (9th Cir. 1984). Accordingly, the income and assets of the business trust, the equipment in the equipment trust, the residence in the family residence trust, and the assets in the foreign trust would all be treated as belonging directly to the owner.

2. GRANTORS MAY BE TREATED AS OWNERS OF TRUSTS.

[14] The grantor trust rules provide that if the owner of property transferred to a trust retains an economic interest in, or control over, the trust, the owner is treated for income tax purposes as the owner of the trust property, and all transactions by the trust are treated as transactions of the owner. Sections 671 - 677. In addition, a U.S. person who directly or indirectly transfers property to a

foreign trust is treated as the owner of that property if there is a U.S. beneficiary of the trust. Section 679. This means that all expenses and income of the trust would belong to and must be reported by the owner, and tax deductions and losses arising from transactions between the owner and the trust would be ignored. Furthermore, there would be no taxable "exchange" of property with the trust, and the tax basis of property transferred to the trust would not be stepped- up for depreciation purposes. See Rev. Rul. 85-13, 1985-1 C.B. 184.

3. TAXATION OF NON-GRANTOR TRUSTS.

[15] If the trust is not a sham and is not a grantor trust, the trust is taxable on its income, reduced by amounts distributed to beneficiaries. The trust must obtain a taxpayer identification number and file annual returns reporting its income. The trust must report distributions to beneficiaries on a Form K-1, and the beneficiary must include the distributed income on the beneficiary's tax return. Sections 641, 651, 652, 661 and 662.

4. TRANSFERS TO TRUSTS MAY BE SUBJECT TO ESTATE AND GIFT TAXES.

[16] Transfers to a trust may be recognized as completed gifts for federal gift tax purposes. Further, whether or not the gift tax applies, if the owner retains until the owner's death the use of, enjoyment of, or income from the property placed in a trust, the property will be subject to federal estate tax when the transferor dies. Section 2036(a).

5. PERSONAL EXPENSES ARE GENERALLY NOT DEDUCTIBLE.

[17] Personal expenses such as those for home maintenance, education, and personal travel are not deductible unless expressly authorized by the tax laws. See section 262. The courts have consistently held that non-deductible personal expenses cannot be transformed into deductible expenses by the use of trusts. Furthermore, the costs of creating these trusts are not deductible. See, for example, Schulz v. Commissioner, 686 F.2d 490 (7th Cir. 1982); Neely v. United States, 775 F.2d 1092 (9th Cir. 1985); and Zmuda.

6. A GENUINE CHARITY MUST BENEFIT IN ORDER TO CLAIM A VALID CHARITABLE DEDUCTION.

[18] Charitable trusts that are exempt from tax are carefully defined in the tax law. Arrangements are not exempt charitable trusts if they do not satisfy the requirements of the tax law, including the requirement that their true purpose is to benefit charity. Furthermore, supposed charitable payments made by a trust are not deductible charitable contributions where the payments are really for the benefit of the owner or the owner's family members. See, for example, Fausner v. Commissioner, 55 T.C. 620 (1971).

7. SPECIAL RULES APPLY TO FOREIGN TRUSTS.

[19] If an arrangement involves a foreign trust, taxpayers should be aware that a number of special provisions apply to foreign trusts with U.S. grantors or U.S. beneficiaries, including several provisions added in 1996. For example, a U.S. person that fails to report a transfer of property to a foreign trust or the receipt of a distribution from a foreign trust is subject to a tax penalty equal to 35 percent of the gross value of the transaction. Other examples of these provisions are the application of U.S. withholding taxes to payments to foreign trusts and the application of U.S. excise taxes to transfers of appreciated property to foreign trusts. See sections 6048, 6677, 1441, and 1491.

8. CIVIL AND/OR CRIMINAL PENALTIES MAY APPLY.

[20] The participants in and promoters of abusive trust arrangements may be subject to civil and/or criminal penalties in appropriate cases. See, for example, United States v. Buttorff, 761 F.2d 1056 (5th Cir. 1985); United States v. Krall, 835 F.2d 711 (8th Cir. 1987); Zmuda and Neely.

IV. IRS ENFORCEMENT STRATEGY FOR ABUSIVE TRUSTS

[21] The Internal Revenue Service has undertaken a nationally coordinated enforcement initiative to address abusive trust schemes - the National Compliance Strategy, Fiduciary and Special Projects. This initiative involves Service personnel from the Assistant Commissioner (Examination), Assistant Commissioner (Criminal Investigation), and the Office of Chief Counsel.

[22] As part of this strategy, the Service seeks to encourage voluntary compliance with the tax law. Accordingly, taxpayers who have participated in abusive trust arrangements are encouraged to file correct tax returns for 1996, as well as amended tax returns for prior years, consistent with the explanation of the law set forth in this notice.

[23] For information regarding issues addressed in this notice, taxpayers may call (202) 622-4512 (not a toll-free number).

Date Published: 04-03-97

Offshore Account & Report of Foreign Bank and Financial Accounts

Likewise, if an offshore account is created for you and the amount of that account (or an aggregate of accounts) exceeds $10,000 at any point during the year you MUST report that to the U.S. Treasury Department, and anyone who tells you differently is a liar. As with offshore trusts, the fact that they tell you that you don't have to report an offshore account is NOT a defense to civil or criminal liability.

If you own a foreign bank account, stock account, mutual fund, unit trust, or other financial account, then you may be required to file a Treasury Department Form 90-22.1, which provides in part as follows:

This form should be used to report financial interest in or signature authority or other authority over one or more bank accounts, securities accounts, or other financial accounts in foreign countries as required by the Department of the Treasury Regulations (31 CFR 103). You are not required to file a report if the aggregate value of the accounts did not exceed $10,000. SEE INSTRUCTIONS ON BACK FOR DEFINITIONS. File this form with Dept. of the Treasury, P.O. Box 32621, Detroit, MI 48232

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INSTRUCTIONS

A. Who Must File a Report -- Each United States person who has a financial interest in or signature authority or other authority over a bank, securities, or other financial accounts in a foreign country, which exceeds $10,000 in aggregate value at any time during the calendar year, must report that relationship each calendar year by filing TD F 90-22.1 with the Department of the Treasury on or before June 30, of the succeeding year.

* * *

B. United States Person -- The term "United States person" means (1) a citizen or resident of the United States, (2) a domestic partnership, (3) a domestic corporation, or (4) a domestic estate or trust.

D. Account in a Foreign Country -- A "foreign country" includes all geographical areas located outside the United States, Guam, Puerto Rico, and the Virgin Islands.

* * *

F. Bank, Financial Account -- The term "bank account" means a savings, demand, checking, deposit, loan or any other account maintained with a financial institution or other person engaged in the business of banking. It includes certificates of deposit.

   The term "securities account" means an account maintained with a financial institution or other person who buys, sells, holds, or trades stock or other securities for the benefit of another.

   The term "other financial account" means any other account maintained with a financial institution or other person who accepts deposits, exchanges or transmits funds, or acts as a broker or dealer for future transactions in any commodity on (or subject to the rules of) a commodity exchange or association.

G. Financial Interest -- A financial interest in a bank, securities, or other financial account in a foreign country means an interest described in either of the following two paragraphs:

   (1) A United States person has a financial interest in each account for which such person is the owner of records or has legal title, whether the account is maintained for his or her own benefit or for the benefit of other including non-United States persons. If an account is maintained in the name of two persons jointly, or if several persons each own a partial interest in an account, each of those United States persons has a financial interest in that account.

   (2) A United States person has a financial interest in each bank, securities, or other financial account in a foreign country for which the owner of record or holder of legal title is: (a) a person acting as an agent, nominee, attorney, or in some other capacity on behalf of the U.S. person; (b) a corporation in which the United States person owns directly or indirectly more than 50 percent of the total value of shares of stock; (c) a partnership in which the United States person owns an interest in more than 50 percent of the profits (distributive share of income); or (d) a trust in which the United States person either has a present beneficial interest in more than 50 percent of the assets or from which such person receives more than 50 percent of the current income.

H. Signature or Other Authority Over an Account --

   Signature Authority -- A person has signature authority over an account if such person can control the disposition of money or other property in it by delivery of a document containing his or her signature (or his or her signature and that of one or more other persons) to the bank or other person with whom the account is maintained.

   Other authority -- exists in a person who can exercise comparable power over an account by direct communication to the bank or other person with whom the account is maintained, either orally or by some other means.

I. Account Valuation -- For items 7, 9, [of the form] and Instruction A, the maximum value of an account is the largest amount of currency and non-monetary assets that appear on any quarterly or more frequent account statement issued for the applicable year. If periodic statements are not so issued, the maximum account asset value is the largest amount of currency and non-monetary assets in the account at any time during the year.

* * *

O. Penalties -- For criminal penalties for failure to file a report, supply information, and for filing a false or fraudulent report see 31 U.S.C. 5322(a), 31 U.S.C. 5322(b), and 18 U.S.C. 1001.

Would this include a debit card? Yes -- Many offshore service providers will tell you that they will own the account, but you will get a debit card to use, and the debit card does not trigger the filing of the TD F 90-22.1. This is completely false, as a debit card clearly constitutes authority over the account.

Not Reporting is Criminal Tax Evasion

International Trade & Investments, Ltd.

Newsletter #63, July 1998

 "Global Prosperity Group -- We have had many questions about these people who peddle extremely expensive tax avoidance programmes of dubious value through a system of seminars and tapes. They operate primarily as a Multi Level Marketer and, as they could claim to have an "end product" in their manuals and books, avoid the charges of being a pyramid scheme. But their claims of the possible financial rewards that could be obtained by members are totally unbelievable and this has led to a wave of complaints (550 last year alone) from those who were gullible enough to subscribe. 'Cease and Desist' orders are now in place for the company in Washington, Oregon and Michigan with, presumably, more to follow.

'"Keith Anderson, the elusive character who appears to mastermind all this nonsense from a PO Box in Washington State, has a tax avoidance policy that, if followed, can only result in a lengthy rest in the local penitentiary. Some 30,000 members seem to have contributed to his financial wellbeing but it seems unlikely that any of his 'strategies', if that's the right word, will have enhanced the lives of his members very much."

From our 1 November 1998 Newsletter

As we predicted, the Global Prosperity Group has collapsed. About the only folks pushing GPG are those who are too stupid to see that it is dead, or are trying to recoup their investments by selling to other suckers too.

The Global Prosperity Group pitched the infamous Three-Tier Trust System, that typically starts out with an LLC or some domestic trust, and eventually all your money ends up in an (allegedly) non-controlled foreign trust. The trouble, GPG promoters' claims aside, is that in our humble opinion this three-tier trust system is criminally tax evasive. Apparently, a lot of GPG buyers have figured that with THREE, not just one, trust that this structure MUST be legal. This is pretty stupid reasoning, sort of like thinking that if you add three times as many wheels to your car that it will go three times as fast.

GPG also made BIG bucks selling seminar materials, audio tapes, and other bogus materials, in addition to the trusts. If you followed through completely with GPG, you would have spent far more than $10,000 purchasing worthless crap that had as its end effect a trip to Club Fed for tax evasion, and for aiding and abetting other to commit tax evasion -- a crime which carries much longer sentences.

But, really, GPG was nothing more-or-less than an elaborate and expensive Multi-Level Marketing (MLM) scam, where suckers essentially purchased not only their trusts and worthless promotional materials at outrageous prices, but also got the right to sell their friends the same materials on a commission or bonus basis.

And in the end GPG fell apart just like any other MLM scam, and lots of people who had purchased GPG for the right to sell more GPG to their friends, lost lots of bucks. Why did it fall apart? Some of the more obvious reasons was that Attorneys General of several states had issued cease-and-desist order to prohibit the sale of GPG, and the IRS took an increasing interest in several GPGers who were not declaring all of their income.

So, GPG has collapsed. But just like any bad disease it has disappeared only to reappear in various new forms, sold mostly by former GPGers (many of whom have now mysteriously migrated to Canada) under a variety of names, which we have been told include (among others): Global Prosperity 2000, Global Prosperity 2001, Global Prosperity New Millennium, Financial Legacy Alliance, The Infinity Group, etc.

So, be careful of any GPG spinoffs. And if you see the infamous three-tier trust system, irrespective of who markets it, you should run like hell because it will not do you any good and will only restrict your ability to visit with your family on Saturday mornings.

Cease and Desist Orders (just a few!)

Michigan
Honorable Frank J. Kelley
Attorney General of Michigan
Office of the Attorney General
Post Office Box 30212
525 West Ottawa Street
Lansing, MI 48909-0212
(517) 373-1110

Oregon
Honorable Hardy Myers
Attorney General of Oregon
Office of the Attorney General
Justice Building
1162 Court Street NE
Salem, OR 97310
(503) 378-6002

Washington
Honorable Christine O. Gregoire
Attorney General of Washington
Office of the Attorney General
P.O. Box 40100
1125 Washington Street, SE
Olympia, WA 98504-0100
(360) 753-6200

Links

NEW! -- The Starkey Expose of Global/IGP The story of David Starkey, who spent years in prison because of his involvement with the Global Prosperity Group and the Institute for Global Prosperity.

NEW! -- Department of Justice Announcement: Global Prosperity co-founder Keith Anderson who later founded Anderson Ark is being extradited to the U.S. and has been charged with a variety of tax crimes.

BEST Global Prosperity Group Scam -- http://www.global-prosperity.com -- Includes information about the Cease-and-Desist Orders against GPG, victim's stories, and much more for victim support.

NEW! -- Investigative News Program 48 Hrs' expose of the Institute for Global Prosperity scam -- http://cbsnews.com/now/story/0,1597,266681-412,00.shtml

Mark Odell's Award Winning GPG Essay

San Diego Union-Tribune article

FREE the GPG tapes -- Why waste your money buying this junk when it is free on the internet? (P.S. It is total junk -- the same cl_ptrap the tax protestors use to sell their bogus materials to unsuspecting victims --  http://global-prosperity.netfirms.com/

CASES WHERE PURE TRUSTS WERE ANNIHILATED

The following is a partial list of cases where Pure Trusts were blown up. The scam artists who sell Pure Trusts will tell you the lies that "They have never lost in court" and "The IRS and creditors are afraid of them." Of course they have to tell you that because if they didn't there is no way you would buy one from them. But as shown, these are complete and total lies, and there is no merit whatsoever to the Pure Trust, as the following cases show what REALLY happens when the Pure Trust meets the IRS (and it ain't pretty for the people who have formed Pure Trusts:

  • Alsop v. Commissioner, T.C. Memo. 1999-172   

  • Arcadia Plumbing Trust v. Commissioner, T.C. Memo. 1994-453

  • Brittain v. Commissioner, T.C. Memo. 1992-277

  • Bixby v. Commissioner, 58 T.C. 757 (1972)

  • Buckmaster v. Commissioner, T.C. Memo. 1997-236 ( 6673 sanctions imposed)

  • Buelow v. Commissioner, T.C. Memo. 1990-219 ( 6673 sanctions imposed)

  • Chase v. Commissioner, T.C. Memo. 1990-164, aff'd, 926 F.2d 737 (8th Cir. 1991)

  • Cheek v. Commissioner, T.C. Memo. 1987-84 ( 6673 sanctions imposed)

  • Christal v. Commissioner, T.C. Memo. 1998-255

  • Clifford v. Helvering, 309 U.S. 331 (1940)(lead case)

  • The Colby B. Foundation v. United States, 1997 U.S. Dist. LEXIS 17698

  • Dombrowski v. Commissioner, T.C. Memo. 1980-261

  • Edwards Family Trust v. United States, 572 F. Supp. 22 (E.D. N.M. 1983)

  • Estrada v. Commissioner, T.C . Memo. 1997-180

  • Fogle v. Commissioner, T.C. Memo. 1986-74

  • Furman v. Commissioner, 45 T.C. 360 (1966), aff'd per curiam, 381 F.2d 22 (5th Cir. 1967)

  • United States v. Geissler, 94-1 USTC 50,060 (D. Ida. 1993)

  • George v. Commissioner, T.C. Memo. 1999-381 (1999)

  • Ghalardi Income Tax Education Foundation v. Commissioner, T.C. Memo. 1998-460 (1998) ( 6673 sanctions imposed)

  • Gran v. Commissioner, T.C. Memo. 1980-558

  • Hanson v. Commissioner, 696 F.2d 1232 (9th Cir. 1983), aff'g T.C. Memo. 1981-675

  • Harrold v. Commissioner, T.C. Memo. 1991-274

  • Holman v. United States, 728 F.2d 462 (10th Cir. 1984)

  • Itz v. United States, 85-1 USTC  9345 (W.D. Tex. 1985); also, Itz v. United States Tax Court and United States Internal Revenue Service, 87-2 USTC  9497 (W.D. Tex. 1987)

  • Jacobson v. Commissioner, T.C. Memo. 1981-261

  • Keefover v. Commissioner, T.C. Memo. 1993-276; see also, Keefover v. Commissioner, T.C. Memo. 1989-151, aff'd per curiam, 923 F.2d 857 (8th Cir 1990)

  • Kelley v. Commissioner, T.C. Memo. 1983-322

  • Leonard v. Commissioner, T.C. Memo. 1998-290 ( 6673 sanctions imposed)

  • Lucas v. Earl, 281 U.S. 111 (1930)(lead case)

  • Luman v. Commissioner, 79 T.C. 846 (1982)

  • Markosian v. Commissioner, 73 T.C. 1235 (1980)

  • Miller v. Commissioner, T.C. Memo. 1986-278

  • Morgan v. Commissioner, T.C. Memo. 1978-401

  • Muhich v. Commissioner, T.C. Memo. 1999-192

  • Neely v. United States, 775 F.2d 1092 (9th Cir. 1985)

  • United States v. Noske, 117 F.3d 1053 (8th Cir. 1997)

  • O'Donnell v. Commissioner, T.C. Memo. 1986-14

  • Para Technologies Trust v. Commissioner, T.C. Memo. 1994-366

  • Paulson v. Commissioner, T.C. Memo. 1991-643

  • Photo Art Marketing Trust, T.C. Memo. 2000-57

  • Prindle International Marketing v. Commissioner, T.C. Memo. 1998-164

  • Professional Services v. Commissioner , 79 T.C. 888 (1982)

  • Reynolds v. Commissioner, T.C. Memo. 1987-261

  • Sampson v. Commissioner, T.C. Memo. 1986-231 ( 6673 sanctions imposed)

  • Sandvall v. Commissioner, 898 F.2d 455 (5th Cir. 1990), aff'g T.C. Memo. 1989-189 ( 6673 sanctions imposed)

  •  Schauer v. Commissioner, T.C. Memo. 1987-237 ( 6673 sanctions imposed)

  •  Schulz v. Commissioner, T.C. Memo. 1980-568, aff'd, 686 F.2d 490 (7th Cir. 1982)

  •  United States v. Scott, 37 F.3d 1564 (10th Cir. 1994)

  •  Smith v. Commissioner, T.C. Memo. 1986-487 ( 6673 sanctions imposed)

  •  Smith v. Commissioner, T.C. Memo. 1998-91

  •  Stoecklin v. Commissioner, T.C. Memo. 1987-453

  •  Stokes v. Commissioner, T.C. Memo. 1999-204

  •  Swayze v. Commissioner, T.C. Memo. 1983-168 ( 6673 sanctions imposed)

  •  Tatum v. Commissioner, T.C. Memo. 1988-579 ( 6673 sanctions imposed)

  •  Taylor v. Commissioner, T.C. Memo. 1983-34

  •  Vercio v. Commissioner, 73 T.C. 1246 (1980)

  •  Vnuk v. Commissioner, 621 F.2d 1318 (8th Cir. 1980), aff'g T.C. Memo. 1979-164

  •  Wesenberg v. Commissioner, 69 T.C. 1005 (1978)

  •  Whitehead v. Commissioner, T.C. Memo. 1992-455

  •  Wilbur v. Commissioner, T.C. Memo. 1993-442

  •  Yeoham  Estate v. Commissioner, T.C. Memo. 1986-487 ( 6673 sanctions imposed)

  •  Zmuda v. Commissioner, 731 F.2d 1417 (9th Cir. 1984), aff'g 79 T.C. 714 (1982)

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Forum

MLM Forum "Buy 1 for yourself and get the chance to sell your friends and family 5 and get your downline started!" We examine the multi-level marketing industry, where only the people who come up with the ideas make any money, and everybody else is left unhappy, broke, and tired of reading scripts and selling overpriced vitamins and similarly worthless products. Includes Global Prosperity, Pinnacle Quest International, IRS Codebusters, Stratia, and other new Global Prosperity scams.

New

Two former IGP Administrators plead guilty in Fraudulent Offshore Tax Shelter Scheme -- Shoshana & Jeffrey Szuch admitted that they used a foreign bank account to conceal income paid by IGP and income earned from the sale of IGP products...
US v Szuch Information
Jeffrey Szuch Plea
Shoshanna Plea

Laura Jean Marie Struckman Indicted -- Alleged to have participated in illegal currency structuring via Crescent Moon, Alternate Ventures, and Specktack-Ular Holdings.

Lawsuit Against Global Prosperity Founders -- A person who bought into the Global Prosperity Scam and then went to prison has filed a federal court lawsuit for damages against the promoters of the scam.

Ten Indicted in Offshore Tax Shelter Promoter Scheme -- A federal grand jury in Seattle returned an indictment yesterday charging the 10 defendants with 87 criminal counts, including conspiracy to defraud the Internal Revenue Service.

Keith Anderson Successfully Extradited -- One of the original Global Prosperity Group founders and one of the biggest tax scam artists in history is in now in a U.S. prison after being flown to Miami from Costa Rica where he unsuccessfuly tried to avoid extradition.

IRS Codebusters Scam - A new variant of the Global Prosperity scam offers you (worthless) research and (equally worthless) forms to let you live a tax-free existence. Supported by a person who claims to be a judge but who has no formal legal education and who mostly heard traffic ticket and small claims matters.

Two California Men Sentenced to Prison in International Money Laundering Scheme

Ninth Circuit gives Institute for Global Prosperity, Andersen and LaMantia big thumbs down -- Noting that there is a Federal Grand Jury investigating the Institute for Global Prosperity, the U.S. Court of Appeals for the Ninth Circuit throws out a bogus lawsuit by Dan Andersen and Zoe LaMantia to halt the execution of search warrants on the promoters of IGP -- IGP membership lists seized!

Anderson's Ark Seller Convicted of Money Laundering For Selling Illegal Trust Program

Global Prosperity Group / Investors International
Criminal fraud multi-level style. One of the worst scams of all time keep reinventing itself with new names and expensive seminars in Cancun. 

Anderson's Ark Accountants Convicted -- Accountants Roosevelt L. Drummer and Roy Lentz, who prepared returns for Keith Anderson in the Anderson's Ark fiasco, will spend some serious prison time after being convicted of tax fraud.

Pinnacle Quest International, Inc. -- The Institute for Global Prosperity closes (suckers who bought into IGP take note) and PQII becomes the latest in the long-running Global Prosperity scam. 

The Starkey Expose of Global/IGP -- The story of David Starkey, who spent years in prison because of his involvement with the Global Prosperity Group and the Institute for Global Prosperity.

Department of Justice Announcement: -- Global Prosperity co-founder Keith Anderson who later founded Anderson Ark is being extradited to the U.S. and has been charged with a variety of tax crimes.

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New

'Institute of Global Prosperity' Co-Founder Apprehended and Arrested for Tax Evasion

Institute of Global Prosperity Co-Founder Guilty of Tax Fraud

Global Prosperity Criminal Complaint (05/04/2004) (pdf)

Arrest Warrant: Andersen (05/04/2004) (pdf)

Arrest Warrant: Struckman (05/04/2004) (pdf)

Arrest Warrant: Lamantia (05/04/2004) (pdf)

Listen to Global Prosperity scam in progress
Part 1 | Part 2 | Part 3 | Part 4 | Part 5 | Part 6 | Part 7

Laura Struckman Convicted -- Jury Convicts Institute of Global Prosperity Participant of Conspiracy to Structure Currency Transactions.

Senator Grassley release regarding the Global Propserity scam

Two former IGP Administrators plead guilty in Fraudulent Offshore Tax Shelter Scheme -- Shoshana & Jeffrey Szuch admitted that they used a foreign bank account to conceal income paid by IGP and income earned from the sale of IGP products...
US v Szuch Information | Jeffrey Szuch Plea | Shoshanna Szuch Plea

Margo Jordan Pleads Guilty -- Another GPGer bites the dust for selling Institute for Global Prosperity "education courses" and offshore seminars and as part of her plea deal she agrees to cooperate with the prosecution of other GPGers.

Laura Jean Marie Struckman Indicted -- Alleged to have participated in illegal currency structuring via Crescent Moon, Alternate Ventures, and Specktack-Ular Holdings.

Lawsuit Against Global Prosperity Founders -- A person who bought into the Global Prosperity Scam and then went to prison has filed a federal court lawsuit for damages against the promoters of the scam.

Ten Indicted in Offshore Tax Shelter Promoter Scheme -- A federal grand jury in Seattle returned an indictment yesterday charging the 10 defendants with 87 criminal counts, including conspiracy to defraud the Internal Revenue Service.

Keith Anderson Successfully Extradited -- One of the original Global Prosperity Group founders and one of the biggest tax scam artists in history is in now in a U.S. prison after being flown to Miami from Costa Rica where he unsuccessfuly tried to avoid extradition.

IRS Codebusters Scam - A new variant of the Global Prosperity scam offers you (worthless) research and (equally worthless) forms to let you live a tax-free existence. Supported by a person who claims to be a judge but who has no formal legal education and who mostly heard traffic ticket and small claims matters.

Two California Men Sentenced to Prison in International Money Laundering Scheme

Eric G. Bjotvedt v. Pinnacle Quest International, Inc., and Dave Struckman

Ninth Circuit gives Institute for Global Prosperity, Andersen and LaMantia big thumbs down -- Noting that there is a Federal Grand Jury investigating the Institute for Global Prosperity, the U.S. Court of Appeals for the Ninth Circuit throws out a bogus lawsuit by Dan Andersen and Zoe LaMantia to halt the execution of search warrants on the promoters of IGP -- IGP membership lists seized!

Anderson's Ark Seller Convicted of Money Laundering For Selling Illegal Trust Program

Anderson's Ark Accountants Convicted -- Accountants Roosevelt L. Drummer and Roy Lentz, who prepared returns for Keith Anderson in the Anderson's Ark fiasco, will spend some serious prison time after being convicted of tax fraud.

Pinnacle Quest International, Inc. -- The Institute for Global Prosperity closes (suckers who bought into IGP take note) and PQII becomes the latest in the long-running Global Prosperity scam.

Wayne Anderson and Richard Marks convicted -- Wayne Anderson and Richard Marks convicted of money laundering in relation to Andersons Ark, which was a Global Prosperity Group spin-off.

The Starkey Expose of Global/IGP -- The story of David Starkey, who spent years in prison because of his involvement with the Global Prosperity Group and the Institute for Global Prosperity.

Department of Justice Announcement: -- Global Prosperity co-founder Keith Anderson who later founded Anderson Ark is being extradited to the U.S. and has been charged with a variety of tax crimes


Breaking News

Institute for Global Prosperity raided by IRS!

"The Internal Revenue Service said yesterday that it conducted its most extensive raids ever last week, pursuing suspected promoters of tax evasion schemes for affluent people.

"The I.R.S. says that the promoters used foreign banks and trusts to help people hide their income and create fake deductions.

"Commissioner Charles O. Rossotti said more than three dozen searches were conducted and four arrests made as the I.R.S. deployed about 300 of its 2,700 criminal tax investigators on such cases.

"Among the targets were the Institute of Global Prosperity, which operates on the Internet and promotes what the government says are a variety of fraudulent tax and investment schemes."

Source: New York Times, March 6, 2001.

 


Breaking News

Founder of GPG caught in sting -- now an international fugitive!

The man who started on of the biggest criminal schemes of all time, Keith Anderson, is now an international fugitive and the subject of a worldwide manhunt, after being caught setting up GPG-style trusts for people attempting to dodge U.S. tax laws by setting up "Pure Trusts" (a/k/a "Constitutional Trusts", etc.).

Keith Anderson formed Global Prosperity Group in the late 1980s, and then fled the U.S. after scamming literally tens of thousands of people into joining the pyramid scheme, which sells trusts that the IRS has deemed abusive. After GPG collapsed, other scam artists continued to run the scheme under such new names as "Investors International" (collapsed), "Financial Legacy Alliance" (collapsed), and "Institute for Global Prosperity" (scam still active, but fading quickly after the investigative news program 48 Hours' recent expose, see http://cbsnews.com/now/story/0,1597,266681-412,00.shtml).

After fleeing the U.S. for Costa Rica, Anderson himself formed yet another GPG-type scam, called "Anderson's Ark".  According to Tax Analysts (http://www.tax.org):

The complaint alleges that each of the six defendants was a principal in, or referred clients to, an illegal offshore trust operation known as Anderson Ark & Associates, which moved client funds from within the United States to Costa Rica for purposes of tax evasion. From October 1998 through February 2001, the six defendants assisted an undercover IRS agent. The complaint alleges that Anderson Ark was owned and controlled by defendants Wayne and Keith Anderson; defendant Karolyn Grosnickle managed the daily operations in the United States.

Accountants for Anderson Ark, including defendant Richard Marks, were responsible for the initial contact with new clients, assisted them with the paperwork necessary to set up offshore corporations in Costa Rica, and helped clients who wanted more complex and secretive offshore companies to set up entities called Complex Business Organizations. Clients used those entities to move legally and illegally obtained funds using fraudulent consulting invoices, issued by Anderson Ark, which they used to deduct the payments as business expenses on their income tax returns.

Anderson Ark charged fees for setting up the offshore corporations as well as additional fees for moving the funds and creating the fake tax deductions. Defendants Richard Castellini and Michael Gonet referred clients to Anderson Ark and, for a fee, assisted in laundering funds.

U.S. law enforcement has now kicked into "full gear" to prosecute people who sell offshore trusts that claim to save taxes, and in this case not only went after Keith Anderson who started the scheme, but also several lower-level promoters of the deal. Indeed, Marks, Castellini and Gonet were only "finders" for Anderson's Ark. According to other reports, the involved U.S. law enforcement agencies also seized records relating to the people who had joined Anderson's Ark as re-sellers or finders, as well as the names of people who had set up the Anderson's Ark offshore trusts. Doubtless, these people are now on a short fuse to their own incarceration and lengthy prison sentences.

The U.S. Attorney has also charged these defendants with money laundering, a crime that carries very long prison terms. According to a statement by the U.S. Attorney's office:

"Citizens moving money offshore in order to avoid paying taxes or to launder the proceeds of criminal activity is a significant law enforcement problem in the United States," said U.S. Attorney Donald K. Stern. "This undercover sting operation targeted a sophisticated group existing for the sole purpose of allowing U.S. citizens to avoid paying taxes and to hide their assets. By targeting this corrupt organization, we are sending a strong message that law enforcement view such activities as very serious criminal conduct and will devote the necessary resources to prosecute such crime. Taxpayers should not be allowed to avoid their legal obligations through the use of organizations such as this one."

The U.S. government last year alone convicted over 30 people for selling "Pure Trusts" and their offshore variants. U.S. law enforcement is believed to be conducting similar sting operations to round up sellers of the GPG spin-off organizations, including the currently most-active GPG spin-off, the "Institute for Global Prosperity".

 

Breaking News

A couple of recent news articles about the "Pure Trust", which is what GPG and its various spin-off groups sell:

In 1996, the IRS didn't have any convictions in this area. By 1999, the agency had scored 35, and in 2000, it added 52 more.

Courts treat these cases seriously. In November, John Modena of Michigan was sentenced to 5 years in prison for promoting ''sham'' trusts. His clients, five members of the Russell family, each got jail sentences, as well.

Adds Dale Hart, an IRS deputy commissioner: ''We don't lose these cases. The legal history is that these are shams. This is a slam-dunk when we get to court.''

Source Article: IRS puts spotlight on willful tax evaders - Criminal investigation division reduces focus on narcotics cases, by Greg Farrell of USA Today, 27 January 2000

On February 23, 2001, the New York Times reported that a California couple were convicted of helping their clients evade $13.8 million in federal income taxes by using Pure Trusts.

  • Dorothy Henderson, 56, got 11 years in prison.
  • George Henderson, 59, got 6 and 1/2 years in prison.

The federal courts have abolished parol, meaning that Mrs. Henderson, for example, will spend AT LEAST eight years in prison.

The Hendersons in their defense asserted the typical "tax protestor" arguments, such as that income couldn't be defined and that Section 861 excludes most Americans for taxes. The judge thought these arguments were so good that he gave Mr. Henderson an extra 8 months prison time.

According to Mrs. Henderson's lawyer: "She wouldn't listen [to reason]. She insisted on speaking and telling the judge about the 861 position and how as a sovereign citizen of California the federal courts had no jurisdiction and all sorts of gibberish." For her efforts, Mrs. Henderson got an extra five months.

Source Article: California couple sentenced for helping clients evade taxes, by David Cay Johnston of The New York Times, 23 February 2001, Article.

  

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