FINANCIAL PLANNER SENTENCED TO PRISON FOR CONSPIRACY IN OFFSHORE INSURANCE TAX SCAM THAT COST U.S. MORE THAN $2.2 MILLION

WASHINGTON – Bruce M. Cohen was sentenced to 37 months in prison for conspiracy to defraud the United States, the Justice Department announced today. In May 2007, Cohen, of Louisville, Ky., pleaded guilty in a criminal case brought against the ex-owners and former in-house counsel of Buddy’s Carpets and their insurance agents. Judge Susan J. Dlott of the U.S. District Court for the Southern District of Ohio imposed the sentence on Cohen today, two days after Leif D. Rozin, the former owner of Buddy’s Carpets, and Alan W. Koehler, the former in-house counsel, were found guilty on conspiracy and federal tax charges.

Cohen operated an insurance agency in Louisville called The Cohen Agency, as well as a marketing and consulting company called Creative Solutions Group. From 1996 to 2004, Cohen conspired with the principles, associates and clients of an insurance company in the U.S. Virgin Islands, called Caduceus Life and Security Trust, to sell sham “Loss of Income” insurance policies to U.S. taxpayers to aid them in committing tax evasion and other crimes. He and others sold these sham policies as tax deductible products with the understanding that the purchasers would have nearly 85% of their premiums returned to them in a non-taxable manner such as an offshore “loan” or investment. The court found that Cohen’s conduct caused a tax loss to the Internal Revenue Service (IRS) exceeding $2.2 million.

Cohen was previously convicted on three similar charges in March 2006 by a federal jury trial in Cincinnati for his involvement in the sale of these policies to a Cleveland company called G&S Metals Inc. Cohen’s sentence of imprisonment also covered his convictions on those related charges. In addition, the court ordered him to pay a special assessment of $400 and to perform 1000 hours of community service after his release from prison. Finally, Cohen was sentenced to a three-year term of supervised release, which will begin after his release from prison.

“The government will not tolerate abusive tax schemes that promote the use of offshore accounts or the use of sham insurance policies to illegally escape taxes,” said Eileen Mayer, IRS Chief, Criminal Investigation. “Those Americans who file accurate, honest and timely returns can be assured that the government will hold accountable those who don’t.”

“The sentence today demonstrates the significant consequences people face when they violate our nation’s tax laws: significant prison time, being a convicted felon the rest of their lives, and having to pay back all their taxes plus stiff penalties and interest,” said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division.

Assistant Attorney General Hochman; Gregory G. Lockhart, U.S. Attorney for the Southern District of Ohio; and Jose A. Gonzalez, Special Agent in Charge, IRS Criminal Investigation, Cincinnati, thanked Tax Division attorneys Richard M. Rolwing and Patrick J. Murray, who prosecuted the case. They also thanked the special agents of the IRS whose assistance was essential to the successful investigation and prosecution of the case.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.

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