Tax Guru Imprisoned for Promoting Off-shore Tax Havens
Mr. Schneider was ordered to pay a fine of $4,000 and a $100 special assessment. He had previously paid $100,000 in restitution. Mr. Schneider, whose books included "Hiding your Money" and "How to Own Your Own Private International Bank," made millions helping the wealthy set up offshore banks to conceal money from taxation.
On February 11, 2004, Mr. Schneider, pled guilty to the conspiracy charge and as part of his plea agreement, he agreed to cooperate with the government in its continuing investigation of the taxpayers who purchased offshore entities as well as others who might have advised those taxpayers. Schneider cooperated and appeared before the national media to discuss the illegal nature of tax shelters and offshore entities. At sentencing this week, Judge Susan Illston said that the wrong message would be sent if Schneider received no jail time. According to a New York Times article, Schneider was said to have released documents identifying lawyers from Manhattan who worked closely with him.
Jerome Schneider and his co-defendant Eric Witmeyer were indicted by a federal grand jury in San Francisco on December 19, 2002. They were charged with one count of conspiracy and 22 counts of mail and wire fraud in connection with the marketing and sales to U.S. taxpayers of offshore banks and/or corporations. The defendants then caused those entities to be decontrolled, which was a process used by the defendants to attempt to conceal the U.S. taxpayer's ownership in the offshore bank or corporation. This was done in order to evade IRS reporting requirements for taxpayers having an interest in foreign accounts and to evade the payment of tax on income transferred to and/or earned by the offshore bank accounts. Eric Witmeyer, an attorney, pled guilty to the conspiracy count on January 23, 2003, and agreed to cooperate with the government against Mr. Schneider.
Schneider represented to U.S. taxpayers that by means of their ownership of the offshore entities, and so-called decontrol documents to be prepared by counsel such as Witmeyer, the U.S. taxpayers could conceal from the Internal Revenue Service, their ownership and control of funds or assets they caused to be deposited into bank or brokerage accounts held in the name of the offshore banks in financial institutions located outside the United States.
Schneider used financial institutions and entities located outside the United States to conceal the activities of the offshore entities from the Internal Revenue Service.
The prosecution is the result of an investigation by agents of IRS - Criminal Investigation. Jay R. Weill, Chief of the Tax Division prosecuted the case.