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SUNKEN ARK CLAIMS ANOTHER VICTIM

August 17, 2006

It's a staple of shipwreck lore. As the ship goes below the water, it creates a whirlpool that sucks down swimmers who survived the initial disaster.

Anderson's Ark, the failed tax scheme, works much the same way. The Ark set up tax schemes where taxpayers would ship cash overseas pretending that they were making payments for deductible business expense. The Ark would keep the funds for them, net of their cut. The organizers have gotten long prison terms, and the participants are getting sucked down by the sinking ship:

DENVER — A Grand Junction woman was the latest to be convicted in a tax fraud case that’s landed numerous defendants, including a Montrose couple, in hot water.

A federal jury convicted Kris Smith, 52, of filing two false federal income tax returns, failure to file a partnership federal income tax and filing a false refund claim. She faces a maximum sentence of 10 years in prison and a $100,000 fine for each violation.

Smith was found to be a member of Anderson’s Ark Associates and of utilizing a “complex business organization,” a type of tax scheme used to eliminate current-year taxes. The jury found she’d also recovered a refund of more than $70,000.

The Moral? If a tax scheme involves eliminating your income using "fees" to offshore entities, head to the lifeboats.

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