Donald Stevenson of North Palm Beach, Fla., 58, was cleared after a six-day trial on charges that he conspired to defraud the U.S. and corruptly endeavored to obstruct and impede the due administration of Internal Revenue Service laws. Stevenson, the only defendant to be acquitted in the scheme, faced 8 years in prison.
The group pocketed the companies’ cash, filed fraudulent returns and, in some cases, sought and received IRS refunds for prior years, prosecutors claimed. To implement the tax scheme, the U.S. Department of Justice said that the defendants used a four-step process.
The initial purchasers, including MidCoast Financial, owned by Chandrakant Shah and Samyak Veera, bought target companies with cash assets and huge anticipated corporate income tax liabilities, then transferred the companies to straw buyers controlled on paper by Andrew Ahn and Aviel Faliks.
The group then evaded income taxes by using fraudulent transactions designed to create the illusion that the companies had incurred capital and ordinary losses and ultimately distributed the proceeds through hidden means, according to the DOJ.
As part of the scheme, prosecutors alleged that Stevenson, as the head of MidCoast Financial’s acquisition team and the company’s successor, Private Capital Resource Group, Inc., led the effort to identify target companies. Others involved in the scheme have either pled guilty or are fugitives.
Read more at: Tax Times blog