JUSTICE DEPARTMENT SUES SEATTLE-AREA COUPLE TO STOP ALLEGED TAX FRAUD SCAMS

Government Also Sues Two Companies That Husband and Wife Allegedly Created To Help Them Sell Scams

WASHINGTON, D.C. - The Justice Department announced today it has sued John and Candace Sinclair, of Kirkland, Washington, to bar them from selling sham trusts and other allegedly fraudulent entities used to hide customers’ income and assets. In its complaint, filed in federal court in Seattle, the government also sued the Sinclairs’ companies, Director of Integrity Ministries and Director of International Integrity Foundation, which the couple allegedly established to help them sell tax fraud schemes.

The complaint alleges the Sinclairs, who also operate under the name “Fortress International,” help customers set up sham trusts that are used illegally to eliminate or reduce their reported federal tax liabilities. The government also alleges the Sinclairs market a fraudulent “corporation sole” and “ministerial trust” scheme by falsely telling customers that conducting their personal and business activities through a so-called ministerial trust eliminates their obligations to file federal tax returns or pay federal tax. The Sinclairs allegedly charge customers at least $4,000 to purchase one of their scams.

“Stopping tax-scam promoters is a high priority for the Department of Justice and the Internal Revenue Service,” said Eileen J. O’Connor, Assistant Attorney General for the Department of Justice’s Tax Division. “We are using the full range of law enforcement tools, including criminal prosecution where appropriate, to stop sellers and users of tax fraud scams.”

The government’s complaint seeks to prohibit the Sinclairs from selling any type of so-called asset-protection device, including trusts or similar arrangements that facilitate violations of tax laws. The suit also seeks an order directing the Sinclairs to give the Justice Department the names, addresses, e-mail addresses, Social Security numbers, and telephone numbers of their customers.

Misuse of trusts tops the IRS’s list of “Dirty Dozen” tax scams. Information about the “Dirty Dozen” is available at: http://www.irs.gov/newsroom/article/0,,id=120803,00.html. Information about corporation sole tax scams is available at http://www.irs.gov/newsroom/article/0,,id=121566,00.html. More information about the Justice Department’s efforts against tax-scam promoters can be found at: http://www.usdoj.gov/tax/taxpress2004.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax/index.html.