David Cay Johnston/The New York Times
When pressed, Jerome Schneider admitted, "Yes, I am a criminal."
Posted on 11/18/2004 3:10:48 PM PST by Liz
For 28 years, Mr. Schneider promoted offshore tax schemes in books and seminars.
SEATTLE, Nov. 17 - Jerome Schneider, the nation's best-known seller of fraudulent offshore banks, said in an interview today that he had helped hundreds of rich Americans evade taxes, including actors, celebrities and business owners.
Mr. Schneider, who pleaded guilty in February to conspiring to help his clients evade the tax laws, said that he expected "every single one" of his clients to be prosecuted or sued for the taxes they evaded. He said clients sought to evade taxes on incomes ranging from $100,000 to $40 million, though most were from a third to half a million dollars.
Mr. Schneider, 53, spoke in a cramped hotel room here under the watchful eye of three Internal Revenue Service criminal investigators, who said nothing but smiled broadly at times as he answered questions and named clients and associates. The I.R.S. set up the interview with Mr. Schneider but did not interfere with it. The agency, by law, cannot comment on individual taxpayers.
Under the terms of his agreement with the government to plead guilty, Mr. Schneider may not make any public comments about his former clients "without prior consent of the government." He is to be sentenced on Monday in Federal District Court in Los Angeles. In return for his cooperation, he is expected to serve no more than 24 months in prison. He has already paid $100,000 in restitution.
Mr. Schneider said he always reported his full income to the I.R.S. and never personally used an offshore bank to hide income.
Since 1976, Mr. Schneider has set up sham banks for clients in the Cayman Islands, Grenada, Montserratt, Vanuatu, the Cook Islands and, recently, in Nauru, a Pacific island.
Clients paid as much as $60,000 to "acquire" an offshore bank, which consisted of nothing more than pieces of paper to create the appearance of legitimate business activity, he said, confirming the accusations in the government indictment. He said that while most clients wanted to hide money from the I.R.S., some also wanted to conceal money from estranged spouses or creditors.
"Every one of my clients knew full well what they were getting into, including the potential to be prosecuted," he said, detailing how they signed contracts, were advised by lawyers and were told that if tax authorities ever caught onto them they could go to prison. "They understood that," he contended.
He said that all his clients had two things in common - they were rich and they wanted to escape taxes.
Most of the nation's major accounting firms worked with one or another of his clients, he said, and he named two law firms that he said were central to his business.
He said one prominent actress sent money to the United International Bank in Nauru, which he said he created. He said the actress paid $50,000 for a legal opinion asserting that the arrangement was legal.
Mr. Schneider also said that in 1988 he arranged for a prominent motivation coach to place $250,000 in an offshore bank without reporting the money to the I.R.S.
In addition, Mr. Schneider said that a billionaire media businessman, one of several clients who he said were on the Forbes 400 list of the wealthiest Americans, sent $40 million to a sham bank in Nauru to pay for a nut-processing company in 1994. The owner of the company has died, but his estate is challenging in Tax Court an I.R.S. demand that taxes be paid on profits from the sale.
For 28 years, Mr. Schneider promoted offshore tax schemes. He sold, he said, more than a million copies of his book, "The Complete Guide to Offshore Money Havens," which he advertised in The Wall Street Journal and SkyMall, a magazine found in the seat-back pocket on many airlines. The 2000 edition book carried an endorsement by Representative Billy Tauzin, the Louisiana Republican, who also spoke at one of Mr. Schneider's tax evasion conferences. Mr. Tauzin's spokesman, Ken Johnson, said the endorsement was "a stupid mistake."
Mr. Schneider, 53, who lives in Vancouver, British Columbia, was the picture of a successful businessman, dressed in a knit shirt, gray wool slacks and black loafers, his graying hair clipped short, his face framed by horn-rimmed glasses.
He began the interview by describing his conduct in terms of helping people, but when pressed he said, "Yes, I am a criminal."
Mr. Schneider said his undoing began the day more than a decade ago when he asked Jack Blum, a former United States Senate investigator, to speak at one of his offshore seminars. Mr. Blum, who specializes in exposing international financial crimes, wrote a letter to the Justice Department that prompted the investigation that led to Mr. Schneider's guilty plea.
Mr. Blum said, "That Schneider could operate openly for years, buying ads in the Wall Street Journal and the American Airlines flight magazine, shows the utter failure of tax law enforcement." He said law enforcement had known about Mr. Schneider for years, but failed to act.
The Senate Permanent Investigations subcommittee called Mr. Schneider as a witness in 1983 hearings on offshore tax evasion, and two years later the Comptroller of the Currency warned American banks about dealing with some of the offshore banks Mr. Schneider created.
The I.R.S., in court papers, said it began investigating Mr. Schneider in 1997, 14 years after his Senate testimony, because of the letter from Mr. Blum. It took five more years to obtain an indictment.
Today, Mr. Schneider said, he is broke. "I lost everything,'' he said. "My wife divorced me and with the legal fees, everything is gone."
Asked about the millions of dollars he earned setting up offshore banks, he replied, "It is gone, all gone."
Since he has held himself up as the world's leading expert on hiding money offshore, how could one know for sure if Mr. Schneider really is broke? The I.R.S. agents listening to the question put their hands to their mouths to repress grins.
"If you can find it," Mr. Schneider said, "I would say take it."
Big gov't is part of the problem.
actually a tax code that encourages otherwise law abiding citizen to cheat is the problem....a tax code that makes criminals out of otherwise law abiding citizens is the problem.
David Cay Johnston/The New York Times
When pressed, Jerome Schneider admitted, "Yes, I am a criminal."
As I posted above, gov't is part of the problem.
How many of them were Kerry supporters?
How many of them were attacking the President for his tax cuts for the rich?
The NY Slimes reporter had this long article and never mentioned what political party Jerome Schneider belonged to or contributed big time to.
So does that make him a Rat?
His client list should be made public and IRS should go after the guilty. (and I hate the IRS - the system, not the people)
It's no crime to use every legitimate tax strategy to reduce taxes - that's tax AVOIDANCE, which is legal.
However, it is a crime to fake deductions and use scams to EVADE taxes. The guilty should pay.
A major overhaul of the tax system would help to reduce tax evasion.
JMHO
Bad boys! Bad boys! Whatcha gonna do?
Whatcha gonna do when they come for you?
I guess he found out.
I want names. Especially of actors and celebrities.
(Celebrity...is it still "someone who's famous for being famous?")
EXACTLY!! This is why they do not care about higher taxes under a Democratic President, they have no intention of paying them.
I have no doubt that we would see some of the Hollywood elitists who attacked the President over taxes on this list. I'd just love to see the whole list published.
How many of the people he helped were Dems calling for higher taxes?
That sure is a clue......somebody oughta check FEC donors site....just to be sure.
Not his fave tune, I betcha.
hahaha! I bet. :^)
Let's see, a "prominent actress" and a "media businessman".
Anyone want to guess how they voted (if they did)?
November, 2004 -- Hooter's Founder Accused of Hiding "Assets" Offshore
Evidently, the founder of the Hooters restaurant chain, Lynn "L.D." Stewart, who made a fortune by uncovering the "assets" of his waitresses, failed to apply the same business strategy when it came to his taxes!
Stewart has been indicted for tax evasion for his failure to pay millions in taxes. Stewart funneled money through off-shore trusts and companies through an elaborate scheme promoted by Michael Maricle, a certified public accountant who pitched a trust system run by Aegis, a Chicago tax-scam company.
Stewart failed to pay $1.7-million in income taxes for 1997 and $2.3-million for 1998, the indictment states. He earned $12.1-million in taxable income in those two years, but he declared $910,044, according to court documents. According to his lawyer, Stuart will claim that he simply followed the advice of an accountant who set up a web of offshore trust accounts that concealed his income from the Internal Revenue Service.
More Here:
http://64.233.179.104/search?q=cache:Abx2-RtGXxcJ:www.taxprophet.com/hot/Trustscam.shtml
Gosh, that's a toughie (/sarc).
Does it start with a "D"?
Oh, no. Not "tolerant and compassionate" actors and celebrities evading taxes? Say it isn't so (/sarc).
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