WASHINGTON, D.C. – LAWFUEL – The Law News Network – Tax fraud promoter Paul D. Harris was sentenced in U.S. District Court in Denver to five and one-half years in prison, followed by three years of supervised release, in connection with his role in an organization called Tower Executive Resources, the Department of Justice and the Internal Revenue Service (IRS) announced today. Harris was also ordered to pay more than $10,000 towards the costs of prosecution.
On April 27, 2005, a federal jury convicted Harris, of Elizabeth, Colorado, and co-defendant Lester R. Retherford, of Canon City, Colorado, of conspiring to defraud the United States and willfully aiding and assisting in the preparation of a fraudulent income tax return, after a six week trial in Denver. Retherford was sentenced on December 16, 2005 to 48 months in prison and three years of supervised release.
“People who promote and facilitate tax evasion can expect to be prosecuted, convicted, and sentenced to substantial time in federal prison,” said Eileen J. O’Connor, Assistant Attorney General of the Justice Department’s Tax Division. “The Tax Division places a high priority on shutting down the tax evasion programs that cheat all honest taxpayers.”
According to the evidence introduced at trial, wealthy taxpayers paid initiation fees of up to $50,000 to join Tower Executive Resources and thousands more in annual fees to maintain their membership. Harris and Retherford set up shell corporations for their clients that were used to conceal nearly $9 million in taxable income. The clients transferred millions of dollars to secret bank accounts in the Turks and Caicos Islands and other foreign countries. These secret bank accounts were titled under the names of International Business Companies (IBC’s) and other nominee entities. Although these IBCs were owned “on paper” by a taxicab driver from the Turks and Caicos Islands, they were actually controlled by the Tower Executive Resources’ clients. The defendants made it appear as though the offshore transfers were payments for consulting services by issuing a series of false invoices to the clients’ businesses, which the clients falsely deducted on their businesses’ tax returns. The Tower Executive Resources clients then used debit cards and bogus loans to bring the money they had transferred offshore back into the United States for their own personal benefit.
“The establishment of sham offshore entities for the purpose of evading taxes, and the subsequent use of credit and debit cards to access the money in those entities, is illegal,” stated Richard Speier, Acting IRS Chief, Criminal Investigation. “Taxpayers should be wary of ‘initiation fees’ associated with the use of their own money and even more wary of individuals selling arrangements established for the purpose of hiding income from the IRS.”
In addition to Harris and Retherford, nine clients of Tower Executive Resources from across the country have been convicted of tax offenses for their role in this scheme as well. Three more clients are currently under indictment for tax offenses. Additional information about these cases can be found at:
Assistant Attorney General Eileen J. O’Connor and United States Attorney Bill Leone thanked Assistant United States Attorney Thomas O’Rourke and Tax Division Trial Attorney Robert J. Livermore, who prosecuted the case. They also thanked the special agents and revenue agents of the IRS whose assistance was essential to the successful investigation and prosecution of this case.