The lead defendant in a nationwide $60 million tax fraud conspiracy was sentenced to more than 18 years in prison.
Michael A. Vallone was one of the founders and the executive director of Aegis, a now defunct company that marketed and sold trust packages to approximately 650 wealthy taxpayer clients throughout the country. Vallone and five co-defendants were convicted in May of participating in a nearly decade-long scheme to market and sell sham domestic and foreign trusts through a network of promoters, sub-promoters, managers, attorneys and accountants.
Vallone and the others essentially diverted income from businesses into sham trusts for clients, hiding hundreds of millions of dollars in income for clients, resulting in a $60 million tax loss to the United States, according to the Justice Department.
U.S. District Judge Charles Norgle sentenced Vallone to serve 223 months in prison, followed by three years of supervised release. The judge will rule later on the government's request for forfeiture of more than $4 million, his home and off-shore bank accounts, as well as the costs of prosecution. Vallone also remains liable for any taxes, penalties and interest owed. In addition to tax fraud conspiracy, Vallone was found guilty of and sentenced on 24 counts of aiding and assisting the filing of false tax returns, three counts of personal income tax evasion, seven counts of mail fraud and two counts of wire fraud.
Vallone and his co-defendants were convicted following an 11-week trial. The defendants were indicted in 2004, following a lengthy undercover investigation by IRS agents, code-named "Operation Trust Me," and the seizure of approximately 1.5 million documents, computer files and related materials.
All six defendants were found guilty of one count of tax fraud conspiracy and of additional tax offenses, but two of the six were also acquitted on some counts. Sentencing for the remaining defendants will take place in October and November.
