Washington (July 20, 2004) -- A Houston accountant could face six years in prison for helping to prepare fraudulent tax returns, the Justice Department said.
Frank C. Williams of Houston pled guilty to two felony tax charges of aiding and assisting in the preparation of fraudulent tax returns. Williams entered his plea at a federal courthouse in Phoenix. His sentencing is scheduled for Sept. 27.
The Justice Department said that Williams faces a maximum potential sentence of six years’ imprisonment followed by up to two years of supervised release, fines totaling $500,000, and liability for the costs of prosecution.
According to the DOJ, Williams, 54, prepared fraudulent tax returns through an organization known as Innovative Financial Consultants based in Tempe, Arizona. Williams was once licensed as a CPA in Texas.
In April 2003, eight people, including the two founders of IFC, were indicted for conspiring to defraud the Internal Revenue Service. The conspiracy charge alleges that, from 1995 to 2003, IFC created and sold over 3,000 bogus “onshore” and “offshore” trust packages, falsely claiming that taxpayers could avoid paying income taxes by placing their income and assets into the trusts. The scheme allegedly entailed creating a shell limited liability company and two bogus “pure trust organizations” that purportedly owned the LLC and were falsely marketed as having no tax filing requirements, when, in reality, the client owned and maintained full control of the assets and income earned and distributed by the LLC.
The Justice Department said that Williams admitted preparing false Forms 1065 for the LLCs that reported distributions of income to the “pure trust organizations” rather than the individual IFC clients. Williams admitted that he knew the trust organizations were alter egos for the individual clients and that he falsely advised clients that they didn't have to report their share of the LLC income on their individual tax returns because the distributions had been made to the trust organizations. Williams also admitted that his actions caused a tax loss totaling $412,442.
Two of the defendants pled guilty to conspiracy and are awaiting sentencing. The DOJ said that trial of the remaining defendants is scheduled to begin in December.
-- WebCPA staff
