A district court judge has sentenced four defendants to prison terms ranging from eight to 20 years in what the Justice Department says is one of the "most far-ranging tax schemes ever prosecuted."
Chief U.S. District Court Judge John C. Coughenour sentenced Keith E. Anderson, Wayne Anderson, Richard Marks and Karolyn Grosnickle in connection with a tax scam promoted by Anderson's Ark and Associates, an organization with administrative offices in Hoodsport, Wash., that spanned five countries and over 1,500 clients.
The four defendants, along with two others scheduled to be sentenced this week, were convicted following a seven-week trial in late December on charges of conspiracy to defraud the government, mail and wire fraud, money laundering, and aiding and assisting the filing of false tax returns.
Keith Anderson, 62, a former resident of Hoodsport, Wash., was sentenced to 20 years' imprisonment and a $63,525,860 fine. Wayne Anderson, 64, of Fresno, Calif., was sentenced to 15 years' imprisonment and a $25,000 fine, and ordered to pay restitution of $63,525,860. Richard Marks, 60, an accountant from Los Osos, Calif., was sentenced to 15 years' imprisonment and a $42,311,742 fine. Karolyn Grosnickle, 62, formerly from Hoodsport, was sentenced to eight years' imprisonment and a $42,311,742 fine.
Each of the defendants was also sentenced to three years of supervised release and ordered to pay prosecution costs of $66,288. In addition, the court ordered forfeited seven properties in Costa Rica, the AAA administrative office in Hoodsport, and $28 million in laundered funds.
According to the Justice Department, the defendants earned tens of millions of dollars in fees from the sale of several fraudulent tax shelter plans over the Internet from 1997 through early 2001. Under a plan called the "Look Back" program, the defendants helped AAA clients take $120 million in false tax deductions for advertising expenses associated with AAA's "Tax Magic" project, charging clients between $50,000 to $250,000 each to buy into the program, which instructed them to take phony loans from La Maquina Blanca, a Costa Rican bank account used by AAA, with the funds purportedly to be invested with another AAA entity, Mason Advertising. Instead, the DOJ said AAA that simply transferred millions of dollars between an account at Costa Rican banks to create the appearance that the loans were being funded, making the tax deductions arising from the loans false.
Anderson, Anderson, Marks and Grosnickle were also convicted on charges of conspiracy to commit wire and mail fraud, and 19 counts of wire and mail fraud for defrauding clients out of over $7 million in fees for the non-existent loans associated with the Look Back program.
Under a scam called the Look Forward program, the DOJ said that client funds were moved to foreign bank accounts and falsely deducted as consulting or management expenses. To make the deductions appear legitimate, clients were told to send money to a shell company operated by Marks, who transferred the funds to Austrian accounts operated by Wayne Anderson. Ultimately, the money was wired to Costa Rican bank accounts, where it could be withdrawn with international Visa debit cards or wire transfers.
The Justice Department said that Keith Anderson was also convicted of defrauding AAA clients out of an additional $21 million in a pyramid scheme called "Loan 4." Keith and Wayne Anderson were also convicted of international money laundering. Two remaining Anderson Ark defendants, James Moran and Pamela Moran, were scheduled to be sentenced this week. Richard Grosnickle pleaded guilty earlier this month to a charge of obstruction of justice and is awaiting sentencing.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access