10 December – LAWFUEL – The Law News Network – A federal…

10 December – LAWFUEL – The Law News Network – A federal jury in Los Angeles today convicted Garth Kloehn of Las Vegas Nevada, on four federal charges of tax evasion for 1995, 1996 and 1997.

The evidence presented during a four week trial showed that Kloehn was the owner of the Kloehn Co., Ltd, a Nevada corporation that manufactured medical devices. The jury found that, during 1995 and 1996, Kloehn caused his company to take phony business deductions on its corporate tax returns for alleged marketing expenses paid to nominee companies set up in Bermuda and the Cayman Islands for his benefit. Kloehn Company profits sent to Bermuda and the Cayman Islands were repatriated by Kloehn to the United States for purchasing land for himself and his son in Las Vegas on which they built custom homes, as well as for the construction of a new factory for the Kloehn Company in Las Vegas. Evidence presented at trial showed that Kloehn caused others to lie to the IRS on his behalf about the true nature of the funds sent to the Caribbean, falsely representing that the money was sent for fictitious European marketing expenses. The Kloehn Company underreported its taxable income for 1995 and 1996 by over $850,000.

The jury also found that defendant Kloehn evaded his personal tax obligations by failing to report income he received from a limited partnership. Evidence presented at trial showed that Kloehn personally owned the factory out of which the Kloehn Company operated through a limited partnership, but that he did not report as personal income the rent received by that partnership from the Kloehn Company, as he was required by law to do. In total, Kloehn evaded personal taxes on income in excess of $775,000 arising from money received from the nominee Caribbean companies and the factory limited partnership.

Earlier, William Archer, an accountant from Anaheim, California, pleaded guilty to one count of tax evasion arising from his assisting Kloehn in this scheme. According to court documents, Archer admitted that he prepared Kloehn Company’s 1996 corporate federal income tax return knowing that the business deduction for European marketing expenses was improper.

Kloehn is scheduled to be sentenced on March 13, 2006, by United States District Judge Dale Fischer. At that time, he faces a maximum sentence of 20 years in prison and a fine of $1,000,000.

This case is a result of an investigation by the IRS-Criminal Investigation Division.

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