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Six Are Found Guilty of Tax-Shelter Fraud
- Government Cheated Out of $32 Million -
By Paul Shukovsky, Seattle Post-Intelligencer
December 28, 2004
In what Justice Department prosecutor Corey Smith said was among "the most far-ranging fraudulent tax shelters ever prosecuted," more than 1,500 clients of Anderson's Ark and Associates lost about $31 million.
The administrative headquarters of Anderson's Ark was in a Hoodsport home owned by Keith Anderson, 62, who moved to Costa Rica in 1997 and allowed co-defendant Karolyn Grosnickle, 62, to live there and oversee day-to-day operations.
Special agents with the Internal Revenue Service's Criminal Investigation Division began to unravel the complicated scheme in 1999 after a tipster alerted them to an Internet Web site advertising the fraudulent shelters, dubbed "Tax magic," through which Anderson's Ark clients took about $120 million in fraudulent deductions.
Anderson Ark moved client cash into overseas bank accounts and falsely deducted the funds from income tax returns as "consulting" or "management" expenses. In order to make the deductions look legit, Anderson's Ark told its clients to send the money through an Anderson's Ark affiliate to a shell company operated by co-defendant Richard Marks.
Marks, 60, of Los Osos, Calif., would wire the money to Austrian bank accounts operated by co-defendant Wayne Anderson, Keith Anderson's 64-year-old brother from Fresno, Calif. The cash ultimately ended up in Costa Rican bank accounts.
The Anderson brothers and Marks represented themselves in the trial, which was notable for political harangues from Keith Anderson like those most often associated with far-right-wing groups that question the authority of the federal government and IRS. Anderson asserted that he did not recognize the jurisdiction of the court because he is a "human being" rather than a "legal fiction entity."
According to Anderson, the court has jurisdiction only over someone who has accepted a Social Security number and thus has a fictitious identity.
After being found guilty yesterday of multiple counts of mail and wire fraud, money laundering, and aiding and assisting the filing of false tax returns, Anderson told the court: "I do not recognize legal fictions. I remind you that I retain all my God-given rights ... and have never consented to this jurisdiction."
Under federal sentencing guidelines, the judge could sentence him and his brother to more than 30 years in prison.
The jury also found Marks, Grosnickle and two others guilty.
But the jury did not reach a verdict on four other defendants in the seven-week trial.
The government has 30 days in which to decide whether to retry them.
Smith said the government is seeking the forfeiture of several homes in Costa Rica and the United States and hopes to recover some money for Anderson's Ark victims.
He called the case "an excellent example of people who try to find a shortcut on their taxes and end up being victims. A lot of people lost a lot of money."
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