TWO FORMER CALIFORNIA ATTORNEYS SENTENCED TO PRISON FOR ROLE IN TAX AND INVESTMENT FRAUD SCHEME

WASHINGTON, D.C. - Former attorneys, Martin Arnoldini and Jerrold Boshma, were sentenced in federal court in Salt Lake City, Utah, to 53 months in prison for conspiring to defraud the United States and to commit mail and wire fraud in connection with the promotion of a tax fraud scheme, the Justice Department and Internal Revenue Service (IRS) announced today.

U.S. District Judge Ted Stewart also ordered Arnoldini and Boshma to pay restitution in the amount of $900, 000 and to serve three years of supervised release upon the completion of their terms of imprisonment. On April 14, 2004, Arnoldini and Boshma pleaded guilty to conspiracy. As a condition of their plea agreements, Arnoldini and Boshma surrendered their licenses to practice law.

“Tax professionals who help others commit tax evasion pay a steep price for their crimes,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “They forfeit not only the privilege of their professional livelihood, but also their liberty when they are sentenced to prison.”

According to documents filed with the court, Arnoldini and Boshma were attorneys licensed to practice law in California and were partners in Century Law Offices in Valencia, Calif. Arnoldini also holds an advanced degree in taxation. Arnoldini and Boshma are two of 11 individuals who promoted a tax fraud scheme that involved the use of trusts and foreign bank accounts. The other conspirators include two attorneys, a CPA and a former IRS revenue agent, all of whom have pleaded guilty in this case.

“One of the IRS’s enforcement priorities is to ensure that attorneys, accountants and other tax practitioners adhere to professional standards and follow the laws,” said Nancy Jardini, Chief, IRS Criminal Investigation. “Concealing income from the government through the use of fraudulent trust arrangements is not financial planning; it’s criminal activity. Those who promote these activities or willfully invest in these schemes will be held accountable.”

Arnoldini and Boshma admitted in their plea agreements that beginning in 1997, they promoted and sold a fraudulent “trust” scheme designed to evade federal income taxes through Century Law Offices, as licensees of World Contractual Services, and later through CornerStone West. They and their co-conspirators promoted the scheme in seminars, promotional materials and opinion letters, which fraudulently misrepresented to customers that their tax liabilities could be lawfully reduced by transferring businesses, homes, investments and other assets into a trust’s name. Arnoldini and Boshma also admitted that their conduct cost the U.S. Treasury approximately $3.6 million in lost taxes.

In addition, Arnoldini and Boshma admitted to participating in fraudulent offshore investment schemes that caused customers to lose approximately $1.3 million.

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