FEDERAL COURT PERMANENTLY BARS SEATTLE-AREA COUPLE FROM PROMOTING TAX-FRAUD SCAMS

Kirkland Husband and Wife Barred From Selling Phony Trust Programs

WASHINGTON, D.C. - The Justice Department announced today that a federal court in Seattle has permanently barred John and Candace Sinclair of Kirkland, Washington, from selling tax-fraud schemes that use sham trusts to help customers evade federal income taxes. Judge Thomas S. Zilly of the U.S. District Court for the Western District of Washington entered the permanent injunction, which also applies to any business the Sinclairs operate. The court entered a similar injunction on July 1 against the Sinclairs’ co-defendants, Director of Integrity Ministries and Director of International Integrity Foundation.

According to court filings, the Sinclairs sold a fraudulent “corporation sole” and “ministerial trust” scheme, falsely telling customers that conducting their business activities and paying for personal expenses through a so-called ministerial trust would eliminate their obligations to file federal tax returns and pay federal tax. The Sinclairs allegedly charged customers at least $4,000 to purchase one of their scams. The court had entered a preliminary injunction against the Sinclairs in May, barring them from selling the scams and ordering them to provide the government their customers’ names, mailing and e-mail addresses, and telephone and Social Security numbers. The Justice Department said today that the Sinclairs had provided the customer information, as required by the earlier injunction.

“People who sell tax scams enrich themselves at the expense of their customers and law-abiding Americans who pay taxes,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Justice Department and the Internal Revenue Service are working vigorously to stop the promotion of tax fraud.”

Misuse of trusts tops the IRS’s 2005 list of the “Dirty Dozen” tax schemes, which can be viewed at http://www.irs.gov/newsroom/article/0,,id=136337,00.html. Information about corporation sole tax scams, which are number seven on “Dirty Dozen” list, is available at http://www.irs.gov/newsroom/article/0,,id=121566,00.html. More information about this case is available at http://www.usdoj.gov/tax/txdv05011.htm and http://www.usdoj.gov/tax/txdv05223.htm. More information about the Justice Department’s efforts against tax-scam promoters can be found at http://www.usdoj.gov/tax/taxpress2005.htm. Information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.