Four of eight promoters of a fraudulent tax- and debt-elimination scheme have been sentenced to length prison terms for their roles in tax fraud, wire fraud and money laundering. The remaining four will be sentenced over the next two months.
A federal jury returned guilty verdicts against eight people on March 31, 2010,, following a month-long trial in Pensacola, Fla., involving the promotion of fraudulent schemes through Pinnacle Quest International, also known as PQI and Quest International.
Those sentenced were:
Arnold Ray Manansala of Renton, Wash., to 12 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering;
Dover Eugene Perry, also of Renton, to 10 years in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering;
Michael Guy Leonard of Troy, N.Y., to nine years and one month in prison for conspiracy to defraud the United States and to commit wire fraud, and conspiracy to commit money laundering; and
Mark Daniel Leitner of Fairport, N.Y., to five years in prison for conspiracy to defraud the United States and to commit wire fraud.
Tax evasion strategies
According to the evidence presented during trial, PQI was an umbrella organization for numerous vendors of tax and credit card debt elimination scams. Some of the PQI vendors, such as Southern Oregon Resource Center for Education (SORCE), sold bogus theories and strategies for tax evasion.
For fees starting at $10,000, SORCE assisted its customers in the creation of a series of sham business entities in the United States and Panama. Other tax-related PQI vendors denied the legitimacy of the income tax system on various theories and provided customers with a "reliance defense" that consisted of a paper trail of frivolous correspondence which a client could allegedly use as evidence of good faith if the client were prosecuted.
The government established that other PQI vendors sold fraudulent schemes for eliminating credit card debt, the most successful of which was called Financial Solutions. That enterprise charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt.
The product was wholly ineffective, and customers typically were sued by their creditors and often forced into bankruptcy.
According to the evidence, another PQI vendor, MYICIS, operated as a sophisticated, computerized "warehouse bank." MYICIS was a single bank account in which customers pooled their money. It was promoted to PQI's clients as a method to hide their assets from the IRS as a result of the pooled nature of the account. MYICIS had 3,000 clients and approximately $100 million in deposits over a three year period.
Evidence introduced at trial showed that PQI purported to sell only CDs and tickets to offshore conferences. However, PQI acted as a gateway to its fraudulent vendors. Clients seeking the tax evasion and debt elimination vendors could access the product only if they joined PQI first. The cost of membership ranged from $1,350 to $18,750, depending on the level of access. In May 2008, a federal district court issued a preliminary injunction against the promoters of Pinnacle Quest International.
"Today's sentences send a powerful and unequivocal message to those who seek to evade and help others evade their taxes," said Acting Assistant Attorney General John A. DiCicco of the Justice Department's Tax Division. "Those who promote tax fraud schemes will be investigated, prosecuted, and convicted, and they also face substantial prison sentences."
"Victor S. O. Song, Chief, IRS Criminal Investigation, noted, "There is no secret formula that can eliminate an individual's tax obligations, and those who create elaborate schemes that have no purpose other than to mislead others and defraud the Internal Revenue Service will be prosecuted."