The former partner of a convicted income tax evader has been indicted for continuing the same abusive trust scheme that sent her ex-partner to prison.

Sharon D. Kukhahn, also known as Sharon Stephenson, of Tacoma, Wash., was arrested Monday on charges of conspiracy, tax evasion and corrupt interference with internal revenue laws after she was indicted by a grand jury.

According to the indictment, Kukhahn, 61, promoted the same type of abusive trust scheme that in 2006 sent her partner, David Carroll Stephenson, 54, to prison for eight years. Stephenson was convicted following a two-week trial and ordered to pay $8.5 million in restitution. 

Prosecutors claim that Kukhahn engaged in a conspiracy from 1999 to 2005 to promote an abusive trust scheme designed to hide individual taxpayers’ income and assets from the IRS. The indictment alleges that, in total, the conspirators sold trust packages to more than 400 individuals. 

Purchasers used the trust packages to conceal income and assets from the IRS, and, as a result, failed to pay in excess of $7 million in income taxes. The indictment alleges that through her own use of the trust packages, Kukhahn evaded paying income taxes in 2003, 2004, 2005 and 2006.

Prosecutors allege that Kukhahn also ran a business advising clients that they did not owe income taxes while giving them a false interpretation of tax laws and writing letters on their behalf designed to thwart IRS efforts to collect taxes. She sold the scheme to more than 1,400 clients, depriving the U.S. Treasury of more than $4 million in income taxes.

If convicted, she faces up to five years in prison for each of the four counts of tax evasion and for the conspiracy count, and up to three years in prison for the corrupt interference count. Each count carries a $250,000 fine.

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