Los Angeles, California – LAWFUEL – The Legal Newswire – One of the operators of Global International Insurance was indicted this afternoon by a federal grand jury in Los Angeles for conspiring to obstruct the Internal Revenue Service in the determination and collection of federal income taxes.
Don C. Tompkins, a resident of Glendora in 2004, was indicted on charges alleging that he conspired to obstruct the IRS in the determination and collection of income taxes. In conjunction with James Lawrence Craig, of Sheridan, Wyoming, Tompkins established and operated Global International Insurance, Ltd., in the British Virgin Islands, to facilitate their scheme.
According to the indictment of Tompkins and to the plea agreement filed in June 2007 in Craig’s case, Tompkins was the President of Global while Craig, an attorney until 1998, served as Vice President and General Counsel. Beginning in 1996 and continuing until September 2002, both Tompkins and Craig would recruit participants to invest in Global, assisting them in evading personal and corporate income taxes. Tompkins and others would tell the scheme participants that hey would get a complete return on their investment and, at the same time, participate in a tax scheme that would allow them to take tax deductions for insurance losses purportedly suffered by Global, but which never actually occurred. Tompkins’ indictment specifies that he assisted six participants in his scheme to claim fraudulent losses on their tax returns filed with the IRS totaling over $14.4 million.
As set forth in Craig’s plea agreement, on its face, Global appeared to be a legitimate offshore insurance company that provided property and casualty insurance for “extra-peril” or high risk properties. For a fee, Tompkins and Craig would create fraudulent catastrophic loss documents that would be submitted to the IRS to support losses claimed on the participant’s tax returns that were false. The participants would use the fraudulent losses that Tompkins, Craig, and Global created to reduce their reported income to the IRS and to fraudulently claim a tax loss, resulting in the participants obtaining refunds to which they were not entitled. In his plea agreement, Craig admits that his actions personally caused a tax loss to the IRS of over $3 million and that he earned $424,000 in fees derived from the scheme.
Based upon his plea agreement, Craig faces a statutory maximum 5 years in federal prison and fines totaling $250,000 when sentenced on December 3, 2007. Tompkins also faces 5 years in prison and $250,000 in fines if convicted of the crimes alleged in the indictment.
An indictment is a charging document in which allegations of violations of law are made by the grand jury. Defendants are innocent unless or until proven guilty before a court of law.
The investigation of Tompkins and Craig was conducted by IRS – Criminal Investigation in Los Angeles.
