Monday, March 12, 2012
The United States Justice Department has announced that a federal court has permanently barred the operation of an alleged scheme that helps high-income individuals attempt to avoid income taxes by funnelling money through "welfare benefit plans”.
The US District Court for the Northern District of Illinois has entered permanent injunction orders, to which the defendants consented, against a husband and wife, Tracy and Linda Sunderlage, and four companies, one of which, SRG International Ltd, is registered in Nevis, West Indies.
According to the Justice Department’s complaint, the defendants claimed to operate plans that provide benefits, such as life and health insurance, to participating companies' employees, when in fact the scheme is simply a mechanism for the companies' owners to receive purportedly tax-free or tax-deferred income for their personal use.
The defendants allegedly marketed the scheme to high-income professionals who own small, closely held companies. In the most recent version of the alleged scheme, each participant’s company made supposedly tax deductible payments to a purported benefit plan, that were then allegedly transferred to an account within a company based in Anguilla, in which they were allegedly invested until the owner exited from the programme and received the assets for his or her personal use.
The complaint alleged that many participants owned these accounts through offshore trusts, which Tracy Sunderlage and SRG International Ltd often helped to establish.
The complaint also alleged that participants from across the country have transferred at least USD239m as part of the scheme, but that total contributions may exceed USD300m.
The injunction orders bar the defendants from operating or promoting any purported “welfare benefit plans”. The court also ordered the defendants to provide the government with a list of their customers and to send copies of the injunction orders to their customers.