Two tax attorneys and an insurance agent were sentenced today to a combined 16 years in prison for conspiring to defraud the United States and helping clients file false tax returns, based on their promotion and operation of a fraudulent tax shelter.
Michael Elliott Kohn, an attorney, was sentenced to seven years in prison. Catherine Elizabeth Chollet, also an attorney, was sentenced to four years in prison. David Shane Simmons, an insurance agent and broker, was sentenced to five years in prison.
According to court documents and evidence presented at trial, from 2011 to November 2022, Kohn and Chollet, both of St. Louis, and Simmons, who is based out of Jefferson, North Carolina, promoted, marketed and sold to clients the Gain Elimination Plan, a fraudulent tax scheme.
The defendants designed the plan to conceal clients’ income from the IRS by inflating business expenses through fictitious royalties and management fees. These fictitious fees were paid, on paper, to a limited partnership largely owned by a charity. In reality, Kohn and Chollet fabricated the fees.
Kohn and Chollet advised clients that the plan’s limited partnership was required to obtain insurance on the life of the clients to cover the income that was allocated to the charitable organization. The death benefit was directly tied to the anticipated profitability of the clients’ businesses and how much of the clients’ taxable income was intended to be sheltered.
Simmons earned more than $2.3 million in commissions for selling the insurance policies, splitting the commissions with Kohn and Chollet. Kohn and Chollet received more than $1 million from Simmons. Simmons also filed false personal tax returns that underreported his business income and inflated his business expenses, resulting in a tax loss of more than $480,000.
In total, the defendants caused a tax loss to the IRS of more than $22 million.
In addition to the terms of imprisonment, U.S. District Judge Kenneth D. Bell for the Western District of North Carolina ordered each defendant to serve three years of supervised release and to pay $22,515,615 in restitution to the United States.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Dena J. King for the Western District of North Carolina made the announcement.
IRS Criminal Investigation investigated the case.
Trial Attorneys Kevin Schneider and Todd Ellinwood of the Tax Division and Assistant U.S. Attorney Caryn Finley for the Western District of North Carolina prosecuted the case.
This crime news article "Tax Attorneys and Insurance Agent Sentenced in Tax Shelter Scheme" was originally found on https://www.justice.gov/usao/pressreleases