Six Convicted in $120 Million International Tax Shelter Scam

After seven weeks of trial, six persons associated with Anderson's Ark and Associates, were convicted in connection with one of the most far-ranging fraudulent tax shelter schemes ever prosecuted. With administrative offices in Hoodsport, Wash., the organization spanned five countries and had more than 1,500 clients. "This verdict is a real blow to promoters of shady offshore tax schemes," said Internal Revenue Service commissioner Mark W. Everson. "We are ramping up our enforcement efforts, and we have more cases in the pipeline. People should think twice before getting caught up in these schemes." According to the trial evidence, from 1997 through early 2001, the defendants earned tens of millions of dollars in fees from the sale of several fraudulent tax-shelter plans over the Internet. The two predominant programs were called the "Look Back" and the "Look Forward" programs. Through the Look Back program, the defendants assisted AAA clients in taking $120 million in false income tax deductions for advertising expenses associated with AAA's "Tax Magic" project. In the Look Forward program, client funds that were moved to foreign bank accounts were falsely deducted on their income tax returns as "consulting" or "management" expenses.