A husband and wife have each been sentenced to 10 years in prison for a tax shelter scheme that spanned more than a decade.

Micaela Renee Dutson, 48, and Tony Dutson, 53, formerly of Tigard, Ore., were each sentenced Tuesday by U.S. District Court Judge Anna Brown. The court also ordered a five-year term of supervised release and imposed several conditions to prevent them from continuing to defy federal tax laws once they are released from prison. The Dutsons were convicted last June following a jury trial of conspiring to defraud the IRS, obstructing the IRS, causing clients to use bogus financial instruments in an attempt to pay their taxes and commercial obligations, failing to file tax returns, and aiding and advising a client to file a false tax return (see Couple Convicted in Tax Shelter Scheme).

In addition to imposing 10-year sentences for causing clients to file fictitious financial instruments with the IRS to purportedly pay taxes, the judge ordered concurrent maximum sentences for all of the other counts, recognizing that all of the defendants’ criminal conduct deserved to be punished.

“All of the Dutsons’ criminal behavior, for which they’ve been convicted beyond a reasonable doubt, is the epitome of disrespect of the law,” said Brown. “The sheer number of criminal acts here is broader and more far-reaching than any I’ve seen in this context. This wasn’t just a conspiracy to defraud the United States of its authority to collect taxes through deceitful and dishonest means, but it was a campaign that went on for years and morphed . . . in a variety of illegal tactics all intended to accomplish the same goal.”

According to evidence presented at trial, Micaela Dutson was an Oregon lawyer, and the couple used her law office in Tigard to promote and sell abusive tax trusts for several years before moving to Mesa, Ariz., in 2003. The Dutsons continued to sell the trust packages for years, ignoring several warning letters from the IRS and Oregonian articles cautioning the public against tax shelter scams. After the IRS began auditing the Dutsons’ clients, and notified them that the trusts they were using to conceal their income from the IRS were shams, the Dutsons began a campaign to obstruct the IRS’s audits and investigation, and to harass and intimidate the individual IRS employees who were auditing or investigating them.

They also advised their clients to obtain their “sovereignty,” and they created and presented dozens of fictitious financial instruments to the IRS purporting to pay off back taxes for themselves and a number of their clients. Even though they knew the bogus instruments had no financial value and had never been accepted by a creditor, they continued to sell them to their clients with false promises they would pay off their tax liability. The Dutsons had over 100 clients throughout the United States, but most of their clients lived in Oregon, Washington, California, Arizona, Alaska and Hawaii. The couple made over $1 million from the scheme and paid no income tax on the earnings.

For several years, the IRS tried unsuccessfully to stop the couple from selling abusive tax shelters before eventually referring the matter to the IRS Criminal Investigation division. In March 2006, a federal court in Phoenix ordered the Dutsons to stop promoting their anti-tax views and programs. They violated that injunction by filing baseless liens against IRS employees, filing 30 bogus tax returns attempting to claim fraudulent refunds from the IRS, and falsely reporting to the IRS that the IRS employees who were investigating the Dutsons had received $10 million in income.

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