TUCSON – LAWFUEL – Law News, Law Jobs – Paul K. Charlton, United States Attorney for the District of Arizona and Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division, announced that on Wednesday following a week long trial before U.S. District Court Cindy K. Jorgenson, a federal jury in Tucson, Arizona convicted Scott F. Creasia, 39, of Tucson, on charges of filing two false federal income tax returns for 1998 and 1999. Creasia is scheduled to be sentenced on February 1, 2007 at 9:15 a.m.
According to the evidence presented during the trial, Creasia became associated with Lynden Bridges, a member of Anderson’s Ark and Associates (AAA) in 1998 and utilized a fraudulent tax scheme referred to as a Complex Business Organization (CBO) to eliminate current year taxes in 1998 and 1999 and recover past year taxes in 1996 and 1997 in the form of a refund of over $150,000. The scheme involved the formation of two sham partnerships.
First, Creasia established a sham limited liability corporation for his plumbing business, Plumb Plumbing LLC. Purportedly, Creasia was a 25% owner and Sawtooth, a Nevada trust, was a 75% owner and Creasia fraudulently reported that Sawtooth was responsible for 75% of Plumb Plumbing’s income. In reality, this partnership was a sham for tax years 1998 and 1999, Plumb Plumbing made no distributions to Sawtooth, and Creasia maintained control over all of Plumb Plumbing’s income.
Second, Creasia formed another partnership claiming he was a 95% owner, and then reported a large net operating loss from which he received his 95% distributive share. The net operating loss was large enough to eliminate current year taxes in 1998 and carry back two prior years to recover taxes paid in those years. In reality, the partnership was a sham, having no business purpose and lacking in any economic substance.
Creasia faces up to 3 years in federal prison, and/or a $100,000 fine for each of the two counts of the indictment.
Special Agents with the IRS Criminal Investigation Division conducted the investigation. Nicholas D. Dickinson and Michael C. Vasiliadis , Trial Attorneys, U.S. Department of Justice, Tax Division prosecuted the case.
Additional information about tax fraud schemes may be found on the IRS Criminal Investigation website at www.irs.gov and typing in the keyword “fraud”.
CASE NUMBER: CR-03-1661-TUC-CKJ
RELEASE NUMBER: 2006-244(Creasia)
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