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A Chesterton man has been sentenced to more than 17 years in federal prison in connection with a $60 million tax fraud conspiracy. Timothy Shawn Dunn, 48, was sentenced to 210 months on Wednesday in a Chicago federal court, after being convicted earlier this year on one count of conspiracy to defraud the Internal Revenue Service (IRS), two counts of filing false tax returns, and 11 counts of assisting the preparation of false tax returns. Dunn was also sentenced to three years of probation on his release and order to pay the cost of his prosecution. Following sentencing, Dunn was immediately remanded back to custody. Dunn was one of six persons convicted in May, following an 11-week trial, in connection with the tax conspiracy. All six were associated with The Aegis Company, which for a decade sold sham domestic and foreign trusts for the purpose of diverting and hiding clients’ taxable income, resulting in a $60 million tax loss to the U.S., in what the U.S. Attorney’s Office for the Northern District of Illinois called one of the largest cases ever of its kind. The six were indicted in 2004 after a lengthy undercover investigation by the IRS, code-named Operation Trust Me, in which some 1.5 million documents, computer files, and related materials were seized, the U.S. Attorney’s Office said. Two other defendants in the case and two others in separate cases in Chicago involving the so-called “abusive trusts” previously pleaded guilty. Nationwide the Chicago-based investigation has resulted in convictions of more than 30 defendants. Evidence presented at the trial showed that between July 1994 and December 2003 the six organized, promoted, and sold domestic and foreign/offshore trusts, chiefly to self-employed persons, for fees ranging from $10,000 to $70,000 for a package of one or more Aegis trusts. Those abusive trusts were intended to fraudulently conceal trust purchasers’ true assets and income from the IRS and to illegally reduce or eliminate tax liability, the U.S. Attorney’s Office said. The IRS first caution taxpayers in April 1997 that such trust arrangements were illegal and in fact provide no shelter and have no effect on transferring assets or reducing or eliminating tax liabilities. Evidence further showed that the scheme diverted profits from businesses to a sham trust system and transferred funds either to a bogus charitable trust or to bank accounts in tax haven countries like Belize and Antigua, the U.S. Attorney’s Office said. The defendants then caused the filing of clients’ false tax returns, which claimed false deductions and omitted substantial income, the U.S. Attorney’s Office said. Dunn and his co-defendants were also convicted of tax fraud regarding their own individual tax returns for the years 1997 through 2000, resulting in a tax loss of more than $1 million, the U.S. Attorney’s Office said. Dunn, a certified financial planner, promoted and managed Aegis trusts.
Posted 12/5/2008
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