Quatloos! > Investment Fraud > Offshore Planning > EXHIBIT: Terry Neal > Indicted for Conspiracy

FOR IMMEDIATE RELEASE

Alleged Promoters of Offshore Credit Card Schemes Indicted for Conspiracy to Defraud the IRS

Terry L. Neal, Lee E. Morgan, James Fontano and
Aaron Young allegedly sold packages to client’s telling
them how to avoid paying taxes

Portland, Oregon – April 23, 2003 – Michael W. Mosman, United States Attorney for the District of Oregon, Eileen J. O’Connor, Assistant Attorney General for the Tax Division, and David B. Palmer, Chief, Internal Revenue Service (IRS) Criminal Investigation, announced today that a federal grand jury returned an thirteen count indictment against TERRY L. NEAL, LEE E. MORGAN, JAMES FONTANO and AARON YOUNG. It is alleged that NEAL, MORGAN, FONTANO and YOUNG conspired to defraud the Internal Revenue Service by promoting and selling various tax evasion schemes since at least 1995.

“Identifying and prosecuting promoters of tax evasion is one of our highest priorities,” said Assistant Attorney General Eileen J. O’Conner, head of the Justice Department’s Tax Division. “People who transfer assets offshore to conceal them from the IRS will be held accountable.”

The indictment alleges that the defendants and other unindicted co-conspirators conspired to hide assets and conceal income and expenditures from the IRS through deceitful and dishonest means. NEAL, MORGAN, FONTANO and YOUNG established foreign and domestic corporations for themselves and their clients. The corporations had no employees, no business premises and conducted no business. The defendants established domestic and foreign bank and securities accounts for the corporations. They would then devise ways for the funds to be used in the United States by themselves and the co-conspirators without being easily traceable to the true owner of the funds, and without taxes being paid on the funds. These methods include income stripping, use of warehouse banks, offshore credit or debit cards, false mortgage loans, false insurance policies, and offshore brokerage accounts.

According to the indictment, the defendants charged fees for their services, including, but not limited to: setting up domestic and foreign corporations and keeping them actively registered within their respective jurisdiction; setting up and maintaining bank accounts; providing false documentation for mortgage loans and insurance policies; and arranging for the preparation of tax returns for the client’s Nevada-based corporations. The defendants also created and employed domestic and foreign corporations, bank accounts, brokerage accounts, credit cards and mortgages for their own benefit and to hide income and evade the assessment and collection of taxes.

“The average person doesn’t need an offshore credit card, but promoters are encouraging many people to get them to help evade taxes,” said David B. Palmer, Chief, IRS Criminal Investigation. “Because debit and credit cards provide easy access to offshore accounts in tax haven countries, this type of scheme is particularly egregious and a high priority for IRS Criminal Investigation.”

Also included in this indictment are charges that NEAL and MORGAN knowingly filed false federal income tax returns. NEAL is charged with three counts of filing false federal income tax returns for tax years 1994, 1995 and 1996 and with corruptly obstructing or impeding the due administration of the Internal Revenue Code. MORGAN is charged with four counts of filing false federal income tax returns for tax years 1996, 1997, 1998 and 1999. The indictment further charges NEAL, MORGAN and YOUNG with four counts of aiding and abetting and filing false federal income tax returns for clients for the tax years 1999 and 2000.

Prior to this indictment, on December 27, 2002, search warrants were executed on the offices of Laughlin International, previously known as Morgan, Carter & Young, and on the offices of Privatech Group, LLC (Privatech), owned by MORGAN, YOUNG and FONTANO. Search warrants were again executed at Privatech on April 21, 2003, for additional information. Also on December 27, 2002, NEAL was arrested on tax charges related to this case; he is currently free on bond while awaiting trail.

Dwight Sparlin, Special Agent in Charge, IRS Criminal Investigation, said, “as with this investigation, we are vigorously pursuing not only those who promote these offshore tax schemes, but those who utilize the offshore tax schemes as well.”

This case is being investigated by the IRS Criminal Investigation and prosecuted by AUSA Robert Ross and Trial Attorney Amanda Cruser of the United States Department of Justice, Tax Division, Criminal Enforcement Section.

Indictments are not evidence of guilt, and all defendants are presumed innocent until and unless proven guilty.

For additional information, please contact Robert Ross, Assistant United States Attorney at 503-727-1000 or Dwight Sparlin, Special Agent in Charge, IRS Criminal Investigation at 503-793-4043. For additional information about abusive offshore schemes, visit www.irs.gov.

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AFFIDAVIT FOR A CRIMINAL ARREST WARRANT (pdf)

AFFIDAVIT FOR A SEARCH WARRANT (pdf)

INDICTMENT (pdf)