DENVER – LAWFUEL – Law News Network – Bill Leone, United States Attorney for the District of Colorado, and Terry L. Stuart, Special Agent In Charge of the IRS-Criminal Investigation, Denver Field Office, announced that MICHAEL JAY SHIDLER, age 52, of Denver, Colorado, was sentenced today by U.S. District Court Judge Robert E. Blackburn to serve 2 months in federal prison, followed by 8 months of home detention with electronic monitoring. He was also ordered to pay a fine of $22,000 for tax evasion. Judge Blackburn ordered SHIDLER to report to a facility designated by the Bureau of Prisons by August 21, 2006.
SHIDLER pled guilty to one count of tax evasion before Judge Blackburn on April 21, 2006. He was indicted by a federal grand jury in Denver, Colorado on August 13, 2004. As part of the plea agreement, SHIDLER surrendered his license to practice law in the State of Colorado. He also agreed not to appear before the IRS in tax matters.
According to the indictment and subsequent plea agreement, MICHAEL SHIDLER was an attorney licensed to practice law in the State of Colorado. His practice was primarily in tax return preparation and advice, as well as assistance and representation to clients concerning tax-related matters. One of SHIDLER’s clients was DONALD MACK, who founded and became president, CEO and principal shareholder of a public company known as Comtec International, Inc., a New Mexico corporation whose intended business was the development of telecommunications services and products.
In December 1994, MACK (who was previously indicted by a federal grand jury in Denver on similar criminal tax evasion charges on January 28, 2005, and is awaiting sentencing) was assessed a penalty of approximately $124,031 by the IRS based on the failure of a prior public company with which MACK was involved to account for and pay federal payroll taxes. In January 1996, after MACK unsuccessfully appealed the IRS decision, the IRS served a notice of levy upon a bank where MACK had an account, thereby beginning the process of levying against his assets and property.
Beginning in or about November 1996, in response to this penalty, SHIDLER and MACK entered into a plan to conceal and remove assets, property, and income from the reach of the Internal Revenue Service and MACK’s other potential creditors, through (1) forming and using multiple and interlocking trusts and domestic and offshore shell companies nominally controlled by other individuals; (2) converting MACK’s income into cash; (3) transferring cash and stock to domestic offshore accounts held in the names of the domestic and offshore shell companies and trusts; and (4) then repatriating and transferring the assets back into the United States through the acquisition of real estate properties in Parker, Colorado, held in the names of nominees and domestic shell companies and through “loans” extended to MACK by and through such entities.
The case focused on two particular real estate transactions, which were completed as part of the plan – the purchase of residential property in Parker, Colorado in the name of MACK’s then-spouse; and the purchase of a 40-acre ranch in Parker, Colorado through a nominee individual and one of the shell companies allegedly formed by SHIDLER. The indictment alleges that MACK and SHIDLER used off-shore accounts to facilitate these transactions.
“Attorneys and accountants should be pillars of our system of taxation, not the architects of tax fraud,” said Terry L. Stuart, Special Agent In Charge of the IRS-Criminal Investigation, Denver Field Office.
The investigation was conducted by the IRS-Criminal Investigation. Assistant United States Attorney Ken Harmon and Department of Justice, Tax Division Trial Attorney Dean Secor prosecuted the case.