Chicago (April 12, 2004) -- The Internal Revenue Service has begun the arrests of eight people, including two Chicago area CPAs, in connection with a tax fraud that it says cost the government at least $68 million.
The IRS alleges that six defendants participated in a nearly decade-long conspiracy to market and sell sham domestic and foreign trusts to some 650 wealthy taxpayers through the Palos Hills, Ill.-based Aegis Co.
Following an undercover investigation by IRS agents code-named "Operation Trust Me," a federal grand jury in Chicago returned a 51-count indictment against Michael A. Vallone, of Orland Park; Edward B. Bartoli, of Little River, S.C.; Robert W. Hopper of Gadsden, Ala.; Timothy Shawn Dunn, of Chesterton, Ind.; William S. Cover, of Naperville; and David E. Parker, of Williamsville, N.Y.
All six were charged with one count of tax fraud conspiracy. Other charges levied against some, but not all, of the defendants ranged from aiding and assisting in the filing of false tax returns, to personal income tax evasion, mail fraud and wire fraud. Arrest warrants were issued for all but Bartoli, who the IRS said would be arraigned at a later date.
The indictment seeks, among other things, the forfeiture of $4.125 million from Vallone, Bartoli, Dunn and Cover, as well as the forfeiture of the residences of Vallone, Dunn and Cover.
CPAs Laura M. Baxter of Monee, and Donald J. Todd of South Holland, were indicted separately for allegedly aiding and assisting in the preparation and filing of false tax returns. Tax preparer Robert J. Clausing was indicted last month on similar charges.
According to a spokesman for the U.S. Attorney's office in the Northern District of Illinois, Todd was arrested, pleaded not guilty, and was released on bond. Baxter was expected to turn herself in on Friday.
-- Melissa Klein Aguilar
