Press Releases

January 25, 2007

PRESS RELEASE

JURY CONVICTS FORMER CHIEF EXECUTIVE OFFICER
OF DIGITAL CONSULTING, INC.
OF CONSPIRACY AND TAX EVASION

Boston, MA... A federal trial jury today convicted a Lynnfield man of tax fraud conspiracy and tax evasion for spearheading a scheme in which he diverted millions of unreported income generated by his company, Digital Consulting, Inc. (“DCI”), to an off-shore account in Bermuda to avoid paying taxes.

United States Attorney Michael J. Sullivan and Douglas A. Bricker, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation, announced today that GEORGE SCHUSSEL, age 65, with a primary residence of 5 Kimberly Terrace, Lynnfield, Massachusetts, and other residences in Meredith, New Hampshire and Key West, Florida, was convicted by a jury sitting before U.S. District Judge Reginald C. Lindsay on all three counts of an indictment charging him with one count of conspiracy to defraud the United States and two counts of tax evasion.

"The defendant in this case is a sophisticated, well educated, businessman, who intentionally embarked on a scheme over many years to evade taxes and to obstruct the lawful functions of the IRS in assessing and collecting income taxes he owed. This office will vigorously prosecute and bring to justice anyone who fails to pay their fair share of taxes which support so many critical government functions," commented U.S. Attorney Sullivan.

Evidence presented during the fourteen-day trial proved that SCHUSSEL, the former Chief Executive Officer of Andover based DCI, conspired with others from 1988 through 1998, in an elaborate scheme to avoid paying taxes on DCI’s profits. To prevent discovery of the scheme, SCHUSSEL obstructed an audit by the IRS in March of 1998. SCHUSSEL also filed false and fraudulent corporate and individual income tax returns for the calendar year 1995, by failing to report to the IRS accurate DCI revenues and income which he and his wife received.

"IRS-Criminal Investigation considers corporate fraud a top priority not only because it has important national economic consequences, but also its impact on overall tax compliance," commented Douglas A. Bricker, Special Agent in Charge of the IRS-Criminal Investigation in New England. "We will aggressively pursue tax fraud wherever it is identified. Today's guilty verdict shows that no one is above the law".

DCI, established in 1982 by SCHUSSEL, was in the business of organizing and conducting computer based training seminars, trade shows, and conferences for businesses in the computer industry. Following SCHUSSEL’s indictment in this matter in 2004, DCI ceased doing business in its own name and became part of a company called Shared Insights.

During the period of time SCHUSSEL was running his tax fraud scheme, DCI generated its revenue from ticket sales to participants who attended the seminars, trade shows, and other events, as well as from the contracting and selling of booth space to vendors involved in the shows. From January 1988 through May 8, 1998, SCHUSSEL conspired to defraud the United States by diverting over $8 million of DCI’s gross receipts to an account he controlled at the Bank of Bermuda Limited. After the diverted funds cleared through the bank in Bermuda, SCHUSSEL then transferred the money to an account he controlled at Fidelity Investments. The account in Bermuda was held in the name of Digital International Consulting, Ltd. (“DCIL”), a sham corporation set up in Bermuda by SCHUSSEL to facilitate the diversion of taxable income that he failed to report to the IRS. All of the money diverted to Bermuda was unreported by SCHUSSEL in DCI’s corporate tax returns. SCHUSSEL diverted over $8.5 million of the company’s revenues to Bermuda during the course of the scheme.

The diversion of DCI profits to Bermuda ended in 1995, when SCHUSSEL wanted to sell the company and realized that he could not disclose the true value of the company and its ability to generate substantial income, without potential discovery of the tax evasion scheme.

In the fall of 1997, the IRS commenced an audit of DCI’s 1995 corporate tax return. During the course of this audit, SCHUSSEL, along with others, caused false representations to be made to the revenue agent conducting the audit. Specifically, the auditor was lead to believe that all of the income generated by DCI in 1995 had been deposited at Northmark Bank. When questions arose during the audit relating to certain checks that were identified as payments to DCI, the revenue agent was falsely told that those payments were made pursuant to a business contract that DCI maintained with DCIL for services rendered. In fact, DCIL provided no services to DCI and the contract fraudulently created to give the false impression that DCI and DCIL were engaged in legitimate business dealings. Based on the false representations that were made to the revenue agent, the audit was obstructed.

Judge Lindsay scheduled sentencing for May 29, 2007. SCHUSSEL faces up to 5 years’ imprisonment on each count, to be followed by 3 years of supervised release, and a $250,000 fine on each count. He also faces millions of dollars in tax liability for the taxes he evaded.

The case was investigated by the U.S. Internal Revenue Service, Criminal Investigation and it is being prosecuted by Assistant U.S. Attorneys Carmen M. Ortiz and Jack W. Pirozzolo in Sullivan’s Economic Crimes Unit.

Press Contact: Samantha Martin, (617) 748-3139