California Courts Freezes Bank and Investment Accounts in Tax Fraud Scheme

California Courts Freezes Bank and Investment Accounts in Tax Fraud Scheme

News story posted in U.S. District Court on 12 November 2004| comments
audience: National Publication | last updated: 18 May 2011
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Summary

A California District Court has issued a temporary restraining order to freeze more than $500 million in bank and investment accounts of Xelan Inc., a firm allegedly running fraudulent insurance and charity schemes mainly for clients in the medical profession, according to a November 4 Justice Department release.

Nov. 4, 2004

Full Text:


COURT FREEZES $500 MILLION THAT JUSTICE DEPARTMENT ALLEGES WAS PAID
TO FIRMS RUNNING FRAUDULENT INSURANCE AND CHARITY SCHEMES

Court Papers Allege More Than 3,500 Doctors and Dentists Participated
in Program Run by San Diego-based xxc3©lan Firm

WASHINGTON, D.C. -- Eileen J. O'Connor, Assistant Attorney General for the Tax Division of the Department of Justice, and Carol C. Lam, United States Attorney for the Southern District of California, announced today that a federal court in San Diego, California, has issued a temporary restraining order to California- based xxc3©lan, Inc., and a number of related entities and persons affiliated with the xxc3©lan family of companies.

According to court papers unsealed today, persons and entities affiliated with xxc3©lan have advised thousands of medical professionals primarily doctors to place income in various fraudulent tax avoidance schemes employing purported supplemental insurance products or improper charitable deductions.

The individual defendants named in the suit are L. Donald Guess and Monte T. Mellon of California, Leslie S. Buck of Maryland, David Jacquot now living in Idaho, G. Thomas Roberts of Pennsylvania, and Chris G. Evans and Nigel Bailey of Barbados.

The order freezes over $500 million in bank and investment accounts. The court also appointed a temporary receiver to preserve assets for the payment of taxes or other claims by defrauded parties. The court also ordered Guess, Mellon, Buck, Jacquot and Roberts to surrender their passports to the United States Marshal and not to leave the United States.

According to the government's complaint, more than $500 million is held in investment accounts controlled by xxc3©lan-related and Barbados-based Doctors Benefit Insurance Co.

Court filings also state that millions of dollars in doctor- provided funds have been diverted, with some funds used to pay legal fees and other liabilities of defendants Guess, Buck, Jacquot, xxc3©lan and affiliated entities.

According to the complaint, the IRS estimates that the defendants have sold their fraudulent tax reduction schemes to approximately 4,000 doctors, with the result that those doctors could now owe as much as $420 million in taxes plus interest and penalties. Agents of the IRS's Small Business/Self-Employed Division are investigating those liabilities.

"This action protects the government's interest while we complete the investigation," said Kevin M. Brown, Commissioner of the IRS's Small Business/Self-Employed Division.

"The Justice Department will use the full complement of tools available under federal law to protect the Treasury from schemes that shift the tax burden to law-abiding taxpayers," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "That includes asking courts to appoint receivers to take control of and preserve assets for the payment of taxes due."

The court set a hearing in San Diego for November 18, 2004 to determine whether to extend the relief granted by the temporary restraining order and to consider whether to order the defendants to repatriate any assets held offshore.

Anyone who participated in any xxc3©lan programs who would like information on how to make a claim in the receivership should contact the Receiver, William "Biff" Leonard, by telephone at (702) 262-9322 or by e-mail at biffer@sprynet.com.

The Justice Department has sought and obtained injunctions against a number of tax-scam promoters. More information about these cases is available on the Justice Department website at http://www.usdoj.gov/tax/taxpress2004.htm. More information about the Justice Department's Tax Division can be found at http://www.usdoj.gov/tax.


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