Tax Fraud

Two principals of defunct Seattle investment management firm Quellos Group and a Los Angeles lawyer were indicted in a tax shelter scheme that allegedly created more than $1.3 billion in fraudulent losses for prominent clients, including media mogul and billionaire investor Haim Saban. The operation was "one of the largest tax fraud schemes ever uncovered in this country," U.S. Atty. Jeffrey C. Sullivan in Seattle said Thursday.

A former KPMG partner who was acquitted of charges of defrauding the government in one of the biggest tax fraud cases in U.S. history has filed a lawsuit against the accounting giant alleging that KPMG owes him $30 million in attorney fees, lost wages and future earnings. David Greenberg, who was a partner with the firm's Los Angeles office, was one of four people charged with using tax shelters to help wealthy people escape more than $1 billion in taxes. Two KPMG executives and a lawyer were convicted of the charges in December, but a jury exonerated Greenberg.

A federal jury in Florida acquitted actor Wesley Snipes of felony charges of tax fraud and conspiracy Friday but found the former high-profile star guilty on three misdemeanor charges of failing to file a tax return. Snipes, who starred in such box-office hits as "White Men Can't Jump," "New Jack City" and the "Blade" trilogy, could serve up to three years in prison. He faced up to 16 years in prison if convicted on all counts, which included six counts of failing to file a tax return.

Police have arrested a Texas man suspected in identity thefts involving more than 160 UC Irvine graduate and medical students, authorities said. Michael Tyrone Thomas, 27, of Fort Worth, was an employee in the Student Resources Department of United Healthcare in Dallas, authorities said. The company manages the university's graduate student health insurance program. The 163 identity theft reports involved students in the 2006-07 school year, said UCI Police Chief Paul Henisey.

In a big case largely gone bust, a jury has convicted three men who used tax shelters marketed by accounting giant KPMG to help rich people escape more than $1 billion in taxes, but it exonerated a fourth man who had been jailed for five months. The only trial in what the government once touted as its biggest tax fraud case ever ended Wednesday with U.S. District Judge Lewis A. Kaplan in Manhattan telling David Greenberg that his exoneration proved he had suffered an unfortunate injustice.

In a move that could help prosecutors press their $2-billion tax fraud case against 16 former executives of national accounting firm KPMG, a California accountant pleaded guilty Wednesday to helping to sell sham tax shelters and agreed to cooperate with prosecutors. Steven Acosta, 49, of Pasadena pleaded guilty to conspiracy, tax evasion and obstructing an Internal Revenue Service investigation in deals that cost the U.S. $100 million. He faces a maximum sentence of 16 years in prison.

And you thought your tax bill was bad. Pharmaceutical giant Merck & Co. agreed Wednesday to pay $2.3 billion to settle a long-standing tax dispute with the Internal Revenue Service over a series of partnerships the company used in the 1990s to cut its income taxes. The deal was the second-largest reported tax settlement after a $3.4-billion deal reached in September with British pharmaceutical company GlaxoSmithKline. Still, the settlement was significantly less than the $3.

The Internal Revenue Service estimates that the difference between what Americans owe in federal taxes and what they actually pay every year is about $345 billion annually. In an effort to close this huge "tax gap," Congress and President Bush in December enacted a measure designed to give people more motivation to tattle on dishonest employers, employees, co-workers, acquaintances and former spouses.

Most American taxpayers are likely to get an extra $30 to $60 in their refund checks this year, thanks to a one-time credit available to anyone who made long-distance phone calls. But nine people whose returns were filed electronically from a Riverside halfway house for drug and alcohol abusers last month sought phone-tax refunds totaling $439,632 -- an average of $48,848 each, according to the Internal Revenue Service. Fat chance, tax investigators said.

The federal government has sued the operators of more than 125 Jackson Hewitt Tax Service Inc. tax preparation offices, accusing them of cheating the U.S. Treasury out of more than $70 million through a "pervasive and massive series of tax-fraud schemes." The complaints target five franchises that operate offices in the Atlanta, Chicago, Detroit and Raleigh-Durham, N.C., areas, as well as 24 individuals. Parsippany, N.J.-based Jackson Hewitt is the second-largest U.S.