Caused Tax Loss of $463,100
OAKLAND – LAWFUEL – Tax Law News – United States Attorney Kevin V. Ryan and Special Agent in Charge of IRS-Criminal Investigation Roger L. Wirth announced that Robert Douglas Hazen, 62, a resident of Danville, Calif., pleaded guilty on September 14, 2006, to aiding and assisting in the preparation of a false tax return.
In pleading guilty, Mr. Hazen admitted that in June 1996, he received a letter from the Internal Revenue Service warning him that the government would pursue criminal penalties against promoters of trusts used to evade income taxes and those associated with them. He was also served with a preliminary injunction prohibiting the use of such trusts. Despite such notice and his knowledge that the use of trusts to avoid paying income tax was improper, Mr. Hazen prepared a 1998 income tax return, which falsely claimed trust deductions and reported their income falsely. As a result of such conduct, Mr. Hazen admitted that he was aware that the 1998 individual income tax return did not accurately report the taxable income for those individuals.
According to the plea agreement of Mr. Hazen’s co-defendant Earl Thomas Combs, in 1996, Mr. Combs, a mortgage broker and financial advisor, was introduced to Mr. Hazen who indicated that he had extensive experience in setting up trusts that greatly reduced tax liability. Mr. Combs referred his clients who had been audited to Mr. Hazen. Shortly thereafter, Mr. Combs, along with Mr. Hazen, set up Quest Financial Services in Turlock, California. Through Quest, Mr. Combs and Mr. Hazen promoted a wide variety of financial services, including setting up abusive trusts and fraudulent charitable foundations. Mr. Combs used his experience in mortgage brokering in order to help his clients set up charitable foundations which did not in fact have a charitable purpose. Mr. Combs and Mr. Hazen advised clients that they could take certain deductions based upon the charitable nature of the foundations, knowing full well that the individual foundations had no charitable purpose.
Mr. Hazen admitted that the tax loss to the United States from these illegal trusts was $463,100.
According to IRS Criminal Investigation Special Agent in Charge Roger L. Wirth, ” The IRS will not tolerate promoters of abusive tax schemes. Such promoters put themselves and their clients at serious risk of financial loss, civil penalties and criminal prosecution. The public should be wary of anyone who says that they have a way to keep you from having to pay income taxes.”
Mr. Hazen and Mr. Combs were indicted by a federal grand jury on March 30, 2005. Mr. Hazen and Mr. Combs were each charged with 15 counts of aiding and assisting in the preparation of false tax returns in violation of 26 U.S.C. Section 7206(2) and one count of conspiracy to defraud the United States in violation of 18 U.S.C. Section 371. Under the plea agreement, Mr. Hazen pleaded guilty to one count of aiding and assisting in the preparation of false tax returns. Mr. Combs pleaded guilty on November 21, 2005 to 4 counts of aiding and assisting in the preparation of false tax returns.
The sentencing of Mr. Hazen is scheduled for January 8, 2007, before Judge Claudia Wilkin in Oakland, California. The maximum statutory penalty for each count in violation of 26 U.S.C. Section 7206(2), aiding and assisting in the preparation of false tax returns is 3 years imprisonment and a fine of $250,000. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.
Thomas Moore is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Kathy Tat. The prosecution is the result of a 2 year investigation by the Internal Revenue Service Criminal Investigation.
A copy of this press release may be found on the U.S. Attorney’s Office’s website at www.usdoj.gov/usao/can.
Electronic court filings and further procedural and docket information are available at https://ecf.cand.uscourts.gov/cgi-bin/login.pl.
Judges’ calendars with schedules for upcoming court hearings can be viewed on the court’s website at www.cand.uscourts.gov.
All press inquiries to the U.S. Attorney’s Office should be directed to Luke Macaulay at (415) 436-6757 or by email at [email protected].