COURT BARS ARIZONA MEN FROM PROMOTING TAX FRAUD SCHEME

Valley Men Sold Phony Business Trust Scheme

WASHINGTON – A federal court in Arizona has permanently barred a tax return preparer from promoting a tax scheme that involved creating a phony “Business Trust Organization” or limited liability company that resulted in the loss of millions of dollars of income and payroll tax revenue, the Justice Department announced today. James G. Morris of Mesa, Ariz. consented to the injunction order without admitting the allegations in the government complaint. The United States had previously obtained injunctions against Dennis H. Lawrence of Tempe, Ariz., and Allen Vanderwey of Phoenix.

The government complaint alleged that Vanderwey helped promote the tax scheme by marketing it through a network of insurance salesman throughout Arizona and California. According to the complaint, customers signed up with Vanderwey, who had Lawrence prepare business trusts and limited liability companies. Vanderwey used his business trusts and limited liability companies to disguise the customers’ personal expenses as business expenses, the complaint states.

The government’s suit also alleges that Morris prepared the tax returns that understated the customers’ taxes. According to an IRS estimate contained in the complaint, customers of Morris, Lawrence, or Vanderway failed to report approximately $15 million of income.

The permanent injunctions entered against Morris, Lawrence and Vanderwey require them to notify their customers of the injunction and to give the Justice Department the names, addresses, e-mail addresses, telephone numbers and Social Security numbers of their recent customers.

Since 2001, the Justice Department has obtained injunctions against more than 200 tax-fraud promoters and return preparers. More information about the Justice Department’s efforts against tax-scam promoters and fraudulent return preparers can be found at http://www.usdoj.gov/tax/taxpress2006.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.