LAWYERS GUILTY OF CONSPIRACY IN TAX EVASION.
VALENCIA - Two Valencia attorneys pleaded guilty to conspiracy charges after a joint FBI and Internal Revenue Service investigation into a national tax evasion scheme that involved hundreds of clients and millions of dollars, federal officials said Thursday.
Martin Arnoldini and Jerrold Boschma, partners at Century Law Offices in Valencia, admitted to illegally shifting clients' assets into domestic and foreign trusts and thus fraudulently reducing their income tax liability, according to court documents and their defense attorney Bill Cohan.
The two valley attorneys could face up to five years in prison, and significant fines, on top of losing their law licenses, according to a statement released by the United States Department of Justice.
``People who try to conceal their income from the IRS can lose their money to con artists who make a living selling tax scams,'' said Assistant Attorney General Eileen J. O'Connor, who announced the guilty pleas on Thursday, income tax deadline day, although the pleas were filed on Wednesday. ``Participants in fraudulent tax schemes may face criminal prosecution, and they still will have to pay their taxes, along with interest and civil fraud penalties.''
The scheme employed by Arnoldini and Boschma was operated out of Utah and masterminded by a tax lawyer named David Orr, who pleaded guilty to a conspiracy charge in in April 2003, according to IRS criminal investigations division spokesman Gary Tang.
In all, hundreds of unsuspecting taxpayers throughout the nation were victims of the scheme, and the total amount of cash that Arnoldini and Boschma defrauded from the IRS is about $3.5 million, Tang said. Those who saved money as a result of the fraudulent trusts will be forced to repay the IRS, although they will not be criminally liable, officials said.
In total, six men have now pleaded guilty to charges related to the case.
The two Valencia tax lawyers have agreed to cooperate with the government's investigation into the fraud scheme in hopes of reducing their sentences, according to Cohan, who practices law in San Diego.
``The guilt is based on a reckless disregard for the truth. They got swept up in a feeding frenzy being promoted by other people for a Ponzi scheme,'' Cohan said.
``My clients got drawn into this, and they were foolish enough to participate in it. They don't need to be demonized. They made serious mistakes in judgment, and they're paying the price.''
The IRS and FBI announced the guilty pleas on tax day in hopes of discouraging similar fraud taking place across the country, Tang said.
``With this case and other prosecution of illegal trust promoters, we're going to make sure that those who pay their fair share of taxes do so knowing that we will pursue those who do not,'' Tang said.
``Everyone needs to be aware that there are schemes like this because you'll find yourself in a lot bigger trouble if you get into a (fraudulent) trust. Be careful in talking and dealing with trust promoters and trying to save income taxes.''
Nicholas Grudin, (661) 257-5255
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Apr 16, 2004|
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