The Justice Department has filed suit to stop a Pasadena man from promoting a tax fraud scheme involving sham pension contributions and welfare benefit plans.
The civil injunction suit, filed in U.S. District Court in Los Angeles, aims to permanently bar William Alexander and his two companies, Retirement Plan Services Inc. and Lyons Pensions Inc., from promoting the schemes.
According to the complaint, Alexander helps small-business owners adopt sham pension plans, falsely advising them that they can claim significant deductions for purported contributions to the plans in order to reduce or eliminate their federal income taxes. The complaint also alleges that Alexander fraudulently re-characterizes his customers non-deductible personal expenses as purported deductible pension-plan contributions.
One example of misconduct cited in the complaint was a letter in which Alexander allegedly advised a married couple from Florida who are physicians "to look for old personal checks that you wrote from 1/1/02 through 9/15/03 that are personal checks that I could re-characterize as pension contributions."
The complaint also quotes a letter that Alexander allegedly sent to a Los Angeles customer in which Alexander explains that between $50,000 and $60,000 that the customer had paid as a down payment on her condominium had been re-characterized as a pension-plan contribution. The complaint further alleges that Alexander helped a California cardiologist, who made a purported $350,625 welfare-benefit plan contribution, to get the funds back by using a sham loan.
The complaint also alleges that Alexander advises his customers that they can re-characterize their salaries as pension plan contributions that he can refund to them through sham loans. For example, the complaint alleges that Alexander advised a Los Angeles customer that she could send Alexander a $200,000 check as a purported pension plan contribution, and that Alexander would then return that customers money to her.
According to the complaint, Alexander helps customers adopt pension plans that illegally exclude rank-and-file employees. The complaint cites a letter Alexander allegedly sent to one of his clients, a California physician, in which Alexander explains that the goal is to "exclude the employees from this rich pension plan that I use for the owner." The complaint further alleges that Alexander tries to conceal his pension-plan scheme by purposely not filing required documents with the Internal Revenue Service and Department of Labor.
Alexanders promotion of the pension plan and welfare-benefit tax fraud schemes has allegedly cost the government at least $30 million.
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