A trustee working an abusive tax scheme allegedly garnered almost $10 million in fraudulent tax refunds, according to a recently returned four-count indictment in Louisiana.
Trusts are an important financial tool with advantages that include protection of assets, reducing tax and legal exposure and estate planning. Not just for the wealthy, trusts are a smart choice that can be used in a lot of ways. For a Louisiana resident, Jane Pierce, trusts may also have provided a significant illegal windfall.
We often discuss offshore tax evasion managed through foreign trusts in regions with a preferential or no tax burden. But abusive tax schemes are not limited to offshore tax havens. Trusts can be used in simple and complex tax schemes, including, for example, in Louisiana.
Mail fraud, filing false tax returns and tax fraud schemes
Pierce is a 63-year-old resident of Boyce, Louisiana, where she serves as a trustee, an individual who controls a trust. For reasons unknown, Pierce decided there was money to be made from the trust in ways that were not permitted under the tax code. According to the indictment naming her, Pierce began filing false tax returns on behalf of the trust in order to garner almost $10 million in IRS refunds.
From the proceeds of those refunds, Pierce personally received about $1 million, which she used to buy a house and a car, pay off a loan, and pay mortgages for some relatives. Given the activity, Pierce caught the attention of the IRS, which, not surprisingly, sought the return of the fraudulent refund money.
Individuals who engage in tax crime have different motivations. Sometimes they convince themselves that they deserve unlawful proceeds, and some promise themselves they will eventually stop. There are also those determined to carry on regardless of the gathering storm clouds, and the IRS.
Individuals accused of criminal tax fraud should always seek criminal tax defense, particularly when questions arise about what constitutes tax fraud, generally defined as a deception by misrepresentation of material facts. For more background, see our guide, "Understanding Tax Fraud."
For Pierce, it appears she was fully aware of the illegality of her actions, and when contacted by the IRS, she took the scheme even further. Pierce made an even greater mistake of obstructing the efforts of the IRS to retrieve the stolen refund money by filing a fraudulent amended tax return. She then mailed the IRS a fake check and filed false documentation. In even the simplest sense, Pierce appears to have conducted a deception through misrepresentation of material facts.
Truth and consequences
Pierce was charged with mail fraud, money laundering, filing false tax returns, and interfering with a criminal tax investigation of the IRS. She faces decades in prison on these charges if convicted. Given the charges, the best course for Pierce would be to retain an experienced criminal tax defense attorney. She is going to need it.
Are you being investigated by the IRS? We can help
If you are involved in any form of tax fraud and you become aware that the IRS could be investigating you, speak with an experienced criminal tax attorney as soon as possible. Do not lie or attempt to deceive the IRS. They are probably already ahead of you, as in this case.
If you have reason to believe the IRS is interested in your personal financial reporting or your business, contact Robert J. Fedor at 440-250-9709. If the IRS has not shown interest, and you have falsified tax documentation or are cashing in on your employee payroll withholding, call us. The sooner you get good legal help, the greater the likelihood of mitigating potential charges against you. Reach out today. We serve domestic and international clients and have offices in Cleveland and Chicago.
