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They could use a 'loss of income' policy

June 02, 2010

You can't make your taxes go away by running your cash offshore through a middleman.

There always seem to be scammers willing to pretend to take a deductible payment from you on the promise of returning most of the cash to you offshore, after the scammers take a cut for their trouble. For example, Anderson's Ark was a scam built around bogus "management fees" paid to an offshore middleman, which could then be recovered by offshore ATMs and credit cards.

A Michigan scam used offshore accounts set up as insurance companies for a similar scam. From a Department of Justice press release:

Evidence presented during the four-week trial showed that the three men conspired with John A. Campbell and Anthony Merlo to defraud the United States by promoting, marketing, selling and administering sham "Loss of Income" insurance policies through an insurance company in the U.S. Virgin Islands known as Security Trust Insurance Company. The coconspirators sold these purported insurance policies to wealthy U.S. taxpayers as a tax deductible product, with the understanding that the purchasers would have most of their premiums returned to them in a non-taxable manner. The clients then improperly took tax deductions for the purchase of this sham product and improperly reduced their income taxes. The co-conspirators collected more than $20 million in premiums.

The three "coconspirators" received sentences from five to nine years. Maybe they have a good loss-of-income policy to cover that.

Tags: Andersons Ark.scams.tax crime.