Fraud > Offshore
Planning > EXHIBIT:
Jerome Schneider > Schneider-Witmeyer
FOR IMMEDIATE RELEASE
February 11, 2004
The United States Attorney's Office for the Northern
District of California announced that Jerome Schneider, a resident
of Vancouver, B.C. Canada, pled
guilty today to conspiracy to defraud the Internal Revenue Service
in violation of 18 U.S.C. § 371.
Jerome Schneider and his co-defendant Eric Witmeyer
were indicted by a Federal Grand Jury in San Francisco on December
19, 2002. They were charged in the Indictment with one count of
conspiracy and 22 counts of mail and wire fraud in connection with
the marketing and sales to U.S. taxpayers of offshore banks and/or
corporations. The defendants then caused those entities to be decontrolled
which was a process used by the defendants to attempt to conceal
the U.S. taxpayer's ownership in the offshore bank or corporation,
in order to evade IRS reporting requirements for taxpayers having
an interest in foreign accounts and to evade the payment of tax
on income transferred to and/or earned by the offshore bank accounts.
Eric Witmeyer, an attorney, pled guilty to the conspiracy count
on January 23, 2003, and agreed to co-operate with the government
against Mr. Schneider.
In pleading guilty to conspiring to defraud the
United States, Mr. Schneider admitted that he and Mr. Witmeyer conspired
to defeat and obstruct the lawful functions of the Internal Revenue
Service in its ascertainment, computation, assessment and collection
of income taxes owed by U.S. taxpayers. He admitted marketing and
selling to U.S. taxpayers offshore entities such as those licensed
by the South Pacific Island of Nauru as international banks and
other offshore corporations, doing business in Vancouver, B.C.,
Canada, under the names Premier Corporate Service, LTD; Premier
Financial Advisors, LLC; Premier Management Service LTD and Wilshire
Mr. Schneider represented to U.S. taxpayers that
by means of their ownership of the offshore entities, and so-called
decontrol documents to be prepared by counsel such as Mr. Witmeyer,
the U.S. taxpayers could conceal from the Internal Revenue Service,
their ownership and control of funds or assets they caused to be
deposited into bank or brokerage accounts held in the name of the
offshore banks in financial institutions located outside the United
States. Mr. Witmeyer, at Jerome Schneider's direction and request,
based upon form documents that Mr. Schneider supplied to Mr. Witmeyer,
agreed to act as counsel for the U.S. taxpayer and prepare the so-called
decontrol documents for the U.S. taxpayers who purchased an offshore
entity from Mr. Schneider. Jerome Schneider marketed and sold offshore
entities to U.S. taxpayers for approximately $15,000 to $60,000.
Mr. Witmeyer "decontrolled" the offshore entity for a
fee of approximately $15,000.
The so-called decontrol process included transferring
the U.S. taxpayer's interest in the offshore entity to a so-called
Independent Foreign Owner (IFO) in exchange for a promissory note
in an amount large enough to make it appear as if there was bona
fide and negotiated sale of the offshore entity to the IFO. The
amount of the promissory note was not the result of negotiations
between the U.S. taxpayers and the IFO. Rather, it was an arbitrary
amount set by Mr. Schneider.
Jerome Schneider selected the IFO for the U.S.
taxpayers and despite the purported decontrol of the offshore entity,
Mr. Schneider understood that the U.S. taxpayers in fact owned and
controlled the offshore entity and any accounts opened up in the
name of the offshore entity in any financial institution located
outside the United States. Jerome Schneider used financial institutions
and entities located outside the United States to conceal the activities
of the offshore entities from the Internal Revenue Service.
Jerome Schneider has agreed to cooperate with
the government in it's continuing investigation of the U.S. taxpayers
who purchased offshore entities as well as others who might have
advised those taxpayers.
The sentencing of Jerome Schneider is scheduled
for September 10, 2004 before Judge Illston in San Francisco. The
maximum statutory penalty for the conspiracy count in violation
of 18 U.S.C. § 371 is five years and a fine of $250,000. However,
the actual sentence is dictated by the Federal Sentencing Guidelines,
which take into account a number of factors, and will be imposed
in the discretion of the Court.
The prosecution is the result of an investigation
by agents of IRS CID. Jay R. Weill is the Assistant U.S. Attorney
who prosecuted the case.
A copy of this press release may be found on the
U.S. Attorney's Office's website at www.usdoj.gov/usao/can.
Related court documents and information may be found on the District
Court website at www.cand.uscourts.gov
or on http://pacer.cand.uscourts/gov.
The IRS maintains a website which contains a warning notice to the
public concerning potential abusive tax programs: http://www.treas.gov/irs/ci.
All press inquiries to the U.S. Attorney's Office
should be directed to Assistant U.S. Attorney Matthew J. Jacobs
at (415) 436-7181.
Schneider Plea Agreement - Jerome sells his offshore clients
out by agreeing to testify against them in exchange for a reduced
sentence after pleading guilty to one count of conspiracy to defraud.