IRS Release on Arrests of Offshore Trust Promoters

[2] IRS Commissioner Charles O. Rossotti expressed his appreciation for the assistance of the United States Attorneys offices in Boston and San Francisco as well as the Tax Division of the Department of Justice and the Costa Rican law enforcement authorities. "Last week's historic enforcement activities send an unmistakable signal about IRS' commitment to pursue investigations of promoters and their clients who would try to move money off-shore to evade taxes," Rossotti said.

[3] Last week's activity represents the IRS' continuing efforts to combat tax compliance problems caused by those who promote and participate in the use of trust schemes and other foreign instrumentalities designed to evade U.S. taxes.

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[4] Six individuals from Massachusetts, New Jersey, Washington, California, and Costa Rica were charged on February 26, 2001 in Federal District court in Boston, Massachusetts, four of whom were arrested and two remain at large. The charges arise out of the criminal complaint filed in connection with the IRS investigation of Anderson Ark and Associates alleging a conspiracy to launder monies through the use of offshore trusts and other offshore entities. The program allegedly involved hundreds of clients who diverted millions of dollars through offshore trusts and bank accounts for the express purpose of evading taxation of income earned in the United States. According to the complaint, each of the defendants was a principal in or provided a referral to Anderson Ark and Associates, a self proclaimed "free enterprise" or anti-tax organization in the business of creating, promoting, and implementing schemes to assist U.S. taxpayers in the evasion of their true, lawful income tax liabilities. (See attached press release)

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[5] According to one of the warrants filed in federal court, IRS special agents sought records pertaining to a number of entities and individuals including the Institute of Global Prosperity.

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[6] In an unrelated investigation, IRS special agents executed a search warrant in Manhattan Beach, California, in connection with an investigation of an alleged offshore trust/bank scheme promoted by Jerome Schneider.

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[7] These and other related investigations continue. For more information about IRS efforts to combat abusive trust schemes and summaries of recently prosecuted/sentenced trust cases, see the web site at:

http://www.treas.gov/irs/ci or go directly to http://www.treas.gov/irs/ci/tax_fraud/docabusivetrustschemes.htm

Attachment (US Attorney Press Release

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U.S. Department of Justice

[9] United States Attorney Donald K. Stern and Michael Lahey, Special Agent in Charge of the U.S. Internal Revenue Service, Criminal Investigation for New England, announced today that six individuals have been charged with violating the money laundering statute in connection with moving and concealing funds represented to be the proceeds of bankruptcy fraud and bank fraud. The complaint further alleges that each of the defendants was a principal in, or referred clients to, an illegal offshore trust operation known as Anderson Ark & Associates that moved client funds from within the United States to Costa Rica in order to avoid paying taxes on the money. Individuals charged today include the following:

1. KEITH ANDERSON, age 59, of Villa Punta Canon, Santa Ana,

[11] According to an affidavit filed in federal court in support of the complaint, it is alleged that Anderson Ark and Associates ("Anderson Ark") is a Costa Rican offshore trust program that provides wealthy clients from the United States with the mechanism to move funds, on which they were obligated to pay taxes, offshore to Costa Rican bank accounts set up to make it appear that the funds were neither owned nor controlled by the clients. According to the complaint, the Anderson Ark clients in fact owned and controlled the accounts. Anderson Ark helped the clients repatriate the money in various ways, thus giving them the use of the untaxed money. For example, according the affidavit, the clients were able to avoid U.S. taxes by deducting fictitious consulting invoices as business expenses on U.S. federal income tax returns.

[12] The complaint further alleges that from October 1998 through February 2001, the defendants assisted an individual who, unbeknownst to them, was an undercover Internal Revenue Service agent to launder money that he represented was the proceeds of bankruptcy fraud and bank fraud. The undercover agent told the defendants that he was seeking to conceal the proceeds of the bankruptcy fraud so that he could invest them in a new business venture. In various stages, the defendants moved the money either overseas or through bank accounts in the United States and, after deducting a substantial fee for laundering the funds, returned it to bank accounts controlled by the undercover agent. The complaint further alleges that certain of the defendants told the undercover agent that they had laundered assets for other individuals in the past.

[13] The complaint alleges that Anderson Ark was owned and controlled by WAYNE and KEITH ANDERSON. GROSNICKLE managed the day- to-day operation in the United States under the direction of the ANDERSONS. According to the affidavit, Anderson Ark "information officers" were responsible for the initial contact with new clients and assisted these clients with the paperwork necessary to set up offshore corporations in Costa Rica. Anderson Ark accountants, including MARKS, also helped those clients who desired more complex and secretive offshore companies to set up entities called "Complex Business Organizations" through Anderson Ark. Clients were then able to use these Complex Business Organizations to move legally and illegally obtained funds using fraudulent consulting invoices issued by Anderson Ark which they used to deduct the payments as business expenses on their personal income tax returns. Anderson Ark charged fees for setting up the offshore corporations as well as additional fees for moving the funds and creating the fake tax deductions. CASTELLINI and GONET referred clients to Anderson Ark and, for a fee, assisted in laundering funds.

[14] All of the defendants were arrested and taken into custody today, except KEITH ANDERSON and GROSNICKLE, who are now considered fugitives. If convicted, each of the defendants faces up to 20 years' incarceration and a fine of up to $250,000.

[15] The case is being investigated by Special Agents of the U.S. Internal Revenue Service, Criminal Investigation and is being prosecuted by Assistant U.S. Attorneys Allison D. Burroughs of Stern's Economic Crimes Unit and Alex Whiting of Stern's Public Corruption and Special Prosecution Unit.

Press Contact: Samantha Martin, (617) 748-3139