Dr. Ellen Meredith Stubenhaus, previously of Lake Worth, Florida, and later an expatriate living in Costa Rica, was sentenced to sixty months in prison June 29 by U.S. District Judge M. Casey Rodgers in Tallahassee, Florida, the Justice Department and IRS announced.
Stubenhaus, who was extradited from Costa Rica to the United States in September 2011, had previously pleaded guilty to conspiracy to defraud the United States. In addition to her jail sentence, Stubenhaus was sentenced to three years of supervised release and ordered to pay restitution of $373,549 to the IRS.
According to the plea agreement and court records, Stubenhaus was a salesperson with Pinnacle Quest International (also known as PQI or Quest International). PQI was a multilevel marketing organization that operated a marketplace for a variety of vendors. Trial evidence in related cases showed that between 2002 and 2008, PQI had over 11,000 members throughout the United States.
Stubenhaus admitted in court records that several PQI vendors sold bogus theories and strategies for tax evasion. She utilized the services and schemes of these fraudulent vendors to conceal her own income from selling PQI vendor products and PQI memberships. She also admitted to helping the principals of PQI conceal PQI's income.
Offshore Tax Avoidance Schemes
Some of the most popular methods of repatriating funds include:
- Credit cards that simply draw on the U.S. taxpayer's offshore account.
- Loans from mystery offshore lenders.
- Loans from domestic lenders in amounts beyond the taxpayer's apparent borrowing power (may be secured by offsetting deposits of offshore funds).
- Use of property titled to offshore entities at zero or below-market rental.
- Bogus transactions designed simply to transfer funds to or from offshore entities, such as sales of property to offshore entities in jurisdictions where it is unlikely the property will actually be used or sold.
- Scholarships for taxpayer's children.
- "Payable through" accounts.
As Stubenhaus admitted in the statement of facts, one of the vendors operating under the PQI umbrella was the Southern Oregon Resource Center for Education (SORCE), which assisted its customers in the creation of a series of nominee business entities in the United States and Panama. The CEO of SORCE, Eugene "Gino" Casternovia, is serving a seven-year prison sentence after being convicted at trial of conspiracy to defraud the United States and to commit wire fraud and conspiracy to commit money laundering. His case is currently on appeal.
Court documents also showed that another PQI vendor was MYICIS, a computerized "warehouse bank." MYICIS was a single bank account in which customers secretly pooled their money under the control of a single individual, Wayne Hicks. MYICIS had 3,000 clients and approximately $100 million in deposits over a three-year period. MYICIS was promoted to PQI's clients as a method to hide their assets from the IRS as a result of the secret, pooled nature of the account. Hicks is currently serving a five-year sentence after pleading guilty to conspiracy to defraud the United States.
According to the plea agreement and statement of facts, Stubenhaus established nominee corporations in Panama using the services of SORCE. She then opened a sub-account within the MYICIS warehouse bank in the name of one of her offshore corporations. Substantial portions of the income Stubenhaus earned from selling PQI memberships and PQI's various vendor products was routed through the warehouse bank account, thereby concealing it from the depository bank and from the IRS. From there, Stubenhaus wired significant amounts of money offshore. She also used the warehouse bank to transfer significant sums to the principals of PQI, representing the organization's share of the profits from Stubenhaus's sales of PQI memberships. Stubenhaus also did not file federal income tax returns or pay income taxes while she was affiliated with PQI.
Source: U.S. Department of Justice