FEDERAL COURT BARS TWO OHIO MEN FROM SELLING TAX-FRAUD SCHEME

Scheme Targeted Insurance Agents and Other Self-Employed Individuals

WASHINGTON, D.C. - The Justice Department announced today that an Ohio federal judge has barred Wilson M. Graham, of Mason, Ohio, and Homer Richardson, of Loveland, Ohio, from selling a tax-fraud scheme that insurance agents and other self-employed individuals used to understate their federal income tax liability. In entering the preliminary injunction order, Judge Michael H. Watson of the U.S. District Court for the Southern District of Ohio also barred Graham from preparing federal income tax returns for others. The court also ordered the defendants to provide the government their customers’ names and current addresses.

At a two-day hearing in Cincinnati, the government presented evidence that Richardson, operating under the name HG Asset Management Company, and Graham, operating under the name Graham & Associates, held seminars at which they promoted and sold to self-employed individuals, including many insurance agents, a trust scheme known as the “Aegis” trust. Customers who used the scheme improperly claimed deductions on their tax returns for personal expenses through the use of trusts. The government presented evidence at trial that the IRS has collected over $7.8 million from customers who participated in this scheme and estimates that customers may owe over $40 million in tax, penalties and interest. The court found that the effect of an injunction against Richardson and Graham would be “to put them out of the business of preparing income tax returns and preying upon the public trust.”

“People who buy into tax-fraud schemes are exchanging good money for bad prospects: past due tax bills with interest and penalties, along with the possibility of criminal prosecution,” said Eileen J. O’Connor, Assistant Attorney General for the Tax Division. “The Justice Department and the IRS are committed to stopping the promotion of tax fraud.”

On April 7, 2005, a federal grand jury sitting in Cincinnati returned a 28-count indictment, charging Graham and Richardson with conspiracy to defraud the United States. More information about the criminal case against Graham and Richardson, which is separate from the civil case in which the court entered the preliminary injunction, is available at http://www.usdoj.gov/tax/txdv05170.htm.

More information about the Justice Department’s efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2005.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.