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FOR IMMEDIATE RELEASE TUESDAY, DECEMBER 9, 2003 WWW.USDOJ.GOV

TAX (202) 514-2007 TDD (202) 514-1888

UTAH FEDERAL COURT BARS NATIONWIDE
“EMPLOYEE LEASING” TAX SCAM

Utah-Based Financial Planners Must Disclose Customers’ Names

WASHINGTON, D.C. - The Justice Department today announced that the U.S. District Court for the District of Utah has barred two financial planners from promoting an “employee leasing” tax scheme.

The court’s order requires the defendants to stop promoting the scheme, provide a copy of the court order to their customers, remove all references to the employee-leasing scheme from their website (www.affluentadvisors.com), and provide the Justice Department with the identities of customers who purchased the scheme. The defendants are also barred from promoting any other tax scheme that involves making false or fraudulent statements about the tax laws or preparing documents for customers that will understate their tax liabilities.

“People who help others evade taxes are breaking the law, and the Justice Department will take action to halt their illegal operations,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division.

According to the civil injunction complaint filed by the Justice Department, D. Michael Bishop, Roger K. Fuller, and their business - Cornerstone Strategic Advisors, L.L.C. - falsely and fraudulently advised customers that participation in the employee-leasing program would eliminate federal income taxes on income that exceeded the customers’ personal living needs.

The complaint alleged that Bishop is a law-school graduate and Fuller is a certified public accountant with a master’s degree in taxation. Both men, the complaint also alleged, have extensive experience in financial and tax planning.

According to the complaint, Bishop and Fuller’s customers paid an initial fee of $7,500 to participate in the scheme. The customers, who are self-employed professionals or business owners, then terminated their employment relationship with their own company and contracted with a purported Barbados “employee-leasing” company - Global Executive Placement, Ltd. - to hire them and “lease” their services to a U.S.-based company, Executive Placement Services, a company that Bishop and Fuller own. Executive Placement Services then “leased” the customers’ services back to the customers’ own company.

Under the scheme, the leasing companies allegedly paid the customers only the necessary minimum to meet their basic needs, but collected substantially more in “lease payments” from the customers’ own companies. Thus, a large portion of the earned income the customers had previously received as pay for work at their own company was now diverted to the Barbados-based company. The complaint also alleged that Bishop and Fuller falsely told customers they did not have to report the diverted portion of their income on their own tax returns, even though the customers still had access to the money.

Information on other injunctions the Justice Department has obtained against tax-scheme promoters can be found at www.usdoj.gov/tax/taxpress2003.htm. More information about the Justice Department’s Tax Division can be found at www.usdoj.gov/tax.


Related Documents

Complaint
Consent of Defendants
Permanent Injunction