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Sometimes a quest comes to a bad end

July 30, 2010

Pinnacle Quest International had all of the trappings of a successful multi-level marketing operation. They organized big conferences in resort destinations, and even sponsored a week-long Mediteranean cruise. But rather than selling household cleaners or nutrition supplements, they offered a more risky product line:

In 2007 PQI hosted a 400-person Q3 conference aboard the Celebrity Cruise Line ship Galaxy, promoting a smorgasbord of tax fraud at sea. Ports of call during the May 14-21 Mediterranean cruise included Rome, Italy; Piraeus, Greece; Kusadasi, Turkey; Santorini, Greece; and Mykonos, Greece. Sherry Peel Jackson spoke about her frivolous tax-avoidance arguments at this Q3 conference just a few weeks after her April 13, 2007 federal indictment in the Northern District of Georgia for willful failure to file federal incoe tax returns.

The Pinnacle Quest has reached a bad end. From a Justice Department press release:

On March 31, 2010, a federal jury returned guilty verdicts against eight people, following a month-long trial in Pensacola, Fla., involving the promotion of fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International.
Arnold Ray Manansala of Renton, Wash., was sentenced to 12 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering. Dover Eugene Perry, also of Renton, was sentenced to 10 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering. Michael Guy Leonard of Troy, N.Y., was sentenced to nine years and one month in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering. Mark Daniel Leitner of Fairport, N.Y., was sentenced to five years in prison for conspiracy to defraud the United States and to commit wire fraud.

The appearance of prosperity makes it easier to believe in a tax scheme. After all, would a scam be offering such a nice cruise? Unfortunately, a nice boat doesn't make a crazy scam work. How crazy?

According to the evidence presented during trial, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams. Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion. For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama. Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a "reliance defense" that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.

No matter how nice the boat or the hotel room is, if it looks too good to be true, it probably is.

Previous coverage:

Questing after pinnacles
JUSTICE DEPARTMENT GOES AFTER 'TAX DEFIERS'

Tags: tax crime.tax protesters.