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Lawyer Barred From Selling Tax Schemes

Torrance attorney is also ordered to identify his clients, six of whom allegedly owe the U.S. more than $9.5 million.

July 23, 2003|Kathy M. Kristof | Times Staff Writer

A federal crackdown on suspected tax cheats has claimed a Torrance-based tax attorney, who has been barred permanently from promoting abusive tax schemes over the Internet and in person, Justice Department officials said Tuesday.

A federal judge in Los Angeles also ordered Eduardo Marmolejo Rivera to provide government investigators with the identities of his clients and to post the judge's injunction on his Web site,

The Internal Revenue Service maintains that six of Rivera's clients, who allegedly chose to "opt out" of the federal income tax system at Rivera's urging, owe the federal government more than $9.5 million in taxes, interest and penalties.

"The Department of Justice and the IRS are determined to shut down the promotion of tax-evasion schemes," Eileen J. O'Connor, assistant attorney general in charge of the tax division, said in a prepared statement. "People who encourage others to violate the law will be stopped and brought to justice."

Rivera did not return a reporter's phone calls.

The case against Rivera is one of several dozen that the IRS is pursuing in a redoubled effort to crack down on individuals and companies that promote tax-evasion techniques.

Although statistics are scarce, industry experts believe that tax evasion has burgeoned over the last decade, as IRS enforcement has diminished as the result of a lower budget and reductions in staff.

Now, with estimates of tax revenue lost to cheating in the hundreds of billions annually, the agency has won congressional support to hire more examiners and pursue cheaters much more aggressively. The agency is focusing on promoters such as Rivera both to stop them from selling abusive tax techniques and to get lists of their clients, whom the IRS then targets for audits.

"There is a focused effort to go after promoters -- both the mills that crank out false returns and those that promote false information," said Robert F. Conte, the assistant U.S. attorney handling the Rivera case. "It's a targeted use of our resources."

According to government legal filings, Rivera promised legal opinions and letters that would "inspire and assist" his clients who wanted to stop paying federal income taxes. Rivera sold legal opinions for $100 to $2,000 maintaining that paying income taxes is strictly voluntary for most citizens -- a common argument of tax protesters. According to Rivera's Web site, he also offered to represent clients before the IRS for a retainer of $3,500.

Rivera also was charged with urging his clients' employers not to withhold taxes from the employees' wages. In an unrelated action a week ago, the IRS sued employers in three states for having failed to withhold taxes from workers' wages.

"There is nothing original about his claims, but they are certainly damaging to innocent purchasers of this stuff," Conte said. "We will be watching his Web site to make sure he posts the injunction."

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