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**[EXAMPLES OF CRIMINAL PROSECUTIONS, CIVIL INJUNCTION CASES, AND
PARALLEL CIVIL AND CRIMINAL PROCEEDINGS]{.underline}**

***Tax Criminals Sentenced in the Past Year:***

-   Richard Michael Simkanin, a Texas business owner who claimed that
    there was no law requiring taxes to be withheld from employees'
    wages, was sentenced to serve 84 months imprisonment and pay
    \$302,000 in restitution. He was convicted of failure to collect
    employment taxes from his employees, making false claims against the
    United States, and failing to file individual income tax returns.

-   Nathaniel Green of South Carolina was sentenced to serve 36 months
    in prison and pay \$91,000 in restitution for filing fraudulent
    trust tax returns and filing bogus IRS forms claiming that
    government officials and witnesses had engaged in suspicious
    financial transactions. He was convicted of obstruction of justice,
    three counts of filing a fraudulent tax document, and five counts of
    assisting in preparing and filing fraudulent documents.

-   Nathan H. Suzuki, a certified public accountant and former member of
    the Hawaii House of Representatives, was sentenced to serve three
    years in prison for filing false tax returns and conspiring to
    commit tax fraud. Suzuki admitted that he created offshore
    corporations and bank accounts to obstruct the IRS.

-   Robert J. Jabbour of Florida was sentenced to serve 10 years in
    prison and pay \$1.6 million in restitution to the United States
    after he was convicted of conspiring to impede the IRS and evade
    payment of taxes.

-   Donald L. Donovan of Delaware was sentenced to serve 36 months in
    prison for tax evasion and filing false tax returns. He also was
    ordered to pay a fine of \$7,500, the costs of prosecution, and all
    taxes, interest and penalties to the IRS. Donovan, the owner of a
    Delaware construction company, had not filed tax returns for 1996 to
    1999, despite generating nearly \$3 million in gross receipts and
    taxable income of more than \$250,000. Donovan attempted to conceal
    this income from the IRS by opening and using a bank account with a
    fictitious Social Security number and by using a bank account held
    in the name of a nominee.

-   Steven Swan, of New Hampshire, was sentenced to serve six years in
    prison for preparing more than 200 income tax returns falsely
    claiming that the taxpayers had no income. He was convicted of
    filing false amended "zero-income" tax returns for himself, aiding
    and assisting in the preparation of false "zero-income" tax returns
    on behalf of clients, and corruptly endeavoring to impede the due
    administration of the tax laws.

-   Number range CHAPTERBlayde Crockett, who sold sham trust schemes and
    prepared tax returns in Utah, was sentenced to 70 months
    imprisonment. He was convicted of conspiring to defraud the IRS and
    aiding and assisting in the preparation of false tax returns.

-   Marc M. Harris, a financial adviser and promoter of schemes for
    hiding income and assets offshore, was sentenced in Florida to 204
    months imprisonment, fined \$20 million and ordered to pay
    restitution to the IRS of \$6.5 million. He was convicted of
    conspiring to defraud the IRS, conspiring to commit money
    laundering, and evading more than \$6.2 million in federal excise
    taxes. Number range CHAPTER

-   Gary Harris, who controlled a number of businesses, including an
    historic amusement park, was sentenced in Ohio to serve 151 months
    in prison and pay a \$95,000 fine. Co-defendant Michael Kotula was
    sentenced to 70 months imprisonment and ordered to pay a \$100,000
    fine, costs of prosecution and Number range CHAPTER\$82,000
    restitution to the IRS. A third defendant, Tamara Schwentker-Harris,
    was sentenced to 15 months imprisonment Number range CHAPTERand
    ordered to pay \$17,000 as restitution to the IRS. All three
    defendants were convicted of conspiring to defraud the United States
    of approximately \$4 million in taxes. Messrs. Harris and Kotula
    were also convicted of tax evasion.

-   Everett Eugene Armold, who owned and operated a purchasing club in
    Ohio, was sentenced to 45 months imprisonment and ordered to pay
    restitution to the IRS in the amount of \$1.56 million. He was
    convicted of filing false income tax returns on which he failed to
    report almost \$4 million in income.

-   Duke Amir, who prepared tax returns at a business called D.C. Tax
    Center, was sentenced to 20 months in prison and ordered to pay
    restitution of \$117,326 for preparing fraudulent federal income tax
    returns. Tax losses from his fraud totaled approximately \$204,000.

***Civil Injunction Cases Entered or Affirmed During the Last Year:***

-   Number range CHAPTERThe U.S. Court of Appeals for the Ninth Circuit
    affirmed an injunction order barring Irwin Schiff, Cynthia Neun and
    Lawrence Cohen from advertising or selling Schiff\'s \"zero-income
    tax return\" plan; preparing tax returns for others; and assisting
    others to violate the tax laws, including \"selling services, books
    or other materials that provide direction about how to fill out
    fraudulent or false tax forms.\" Number range CHAPTERIn March 2004,
    a 33-count indictment was returned, charging Schiff, Neun, and Cohen
    with conspiracy, aiding and assisting in the filing of false federal
    income tax returns, filing false federal income tax returns, tax
    evasion, and willfully failing to file federal income tax returns.

-   Number range CHAPTERAnthony Hargis was preliminarily enjoined from
    promoting his warehouse banking scam and the court appointed a
    receiver to seize Hargis' assets. According to the government,
    Hargis used a warehouse banking scam to help his customers hide
    their income, assets, and identities from the IRS. Hargis allegedly
    accepted funds from and then placed the commingled funds in
    commercial bank accounts---held in his name or the names of his
    associates---in California and Texas. He then used the commercial
    bank accounts to write checks to pay customers\' bills.

-   Number range CHAPTERDavid Carroll Stephenson and his businesses were
    enjoined from promoting an abusive trust scam in which customers
    set-up a series of trusts that allegedly made income non-taxable and
    converted personal expenses into deductions. In Number range
    CHAPTERMarch 2005, Stephenson was indicted on charges of conspiracy
    to defraud the U.S. by impeding and impairing the IRS in
    ascertainment and collection of taxes, failure to file returns, and
    criminal contempt for violating the civil injunction.

-   Number range CHAPTERNumber range CHAPTERJoseph O. Saladino of
    Palmdale, California and his organization, Freedom & Privacy
    Committee, were enjoined from promoting corporations sole and the
    false claim of right doctrine. Saladino falsely advised prospective
    customers that the corporation-sole program could exempt them from
    income taxation if they transferred their income and assets to a
    so-called corporation sole and claimed that it was a tax-exempt
    church. In the claim-of-right program, Saladino falsely told
    customers that income earned for their labor is not taxable and that
    they could therefore get refunds of past taxes paid.

-   Number range CHAPTERNational Audit Defense Network---known as NADN
    and based in Las Vegas---Oryan Management and Financial Services,
    four Oryan-affiliated individuals from California (Daniel W. Porter,
    Robert Goetsch, Michelle M. Hernandez, and Joseph Prokop), and ADA
    Adventure, Inc. Number range CHAPTERwere enjoined from organizing or
    selling abusive tax shelters or arrangements that advise or
    encourage customers to attempt to evade federal taxes and from
    preparing federal income tax returns for others. Number range
    CHAPTERNADN allegedly ran a tax-scam boiler room that sold bogus
    websites, home-based businesses, and incorporation packages designed
    to help customers claim improper tax deductions and credits. The
    websites were designed to help customers claim to have a business
    with a website and then improperly claim tax deductions and credits
    for supposedly modifying the website, purportedly to comply with the
    Americans with Disabilities Act (ADA).

-   Number range CHAPTERJoseph Wolf Cecil Fisher, Louise Qualls, and
    Eric Wolf, all residents of Oklahoma City, were permanently enjoined
    from operating or working for so-called professional employer
    organizations or employee leasing companies (PEOs). The order also
    bars the four from operating or working for temporary agencies or
    payroll-service companies, and requires that during the next five
    years they keep the IRS informed of where they work. According to
    the government, the defendants had used more than 35 shell
    corporations as PEOs to evade collection of nearly \$6 million in
    federal employment and unemployment taxes.

-   James Number range CHAPTERBinge and Terrence Bentivegna, from the
    Canton, Ohio area, were enjoined from selling fraudulent tax schemes
    involving sham trusts and the frivolous Section 861
    argument---Number range CHAPTERthat U.S. citizens are not required
    to pay taxes on the income they receive inside the United States.
    The court also permanently barred the two men from preparing
    income-tax returns for customers and from representing customers
    before the IRS. The order stated that the two men had engaged in
    fraudulent and deceptive conduct and that they knew or had reason to
    know that their statements to customers about the tax schemes were
    false.

-   Number range CHAPTERJ.R. Miesch, Jr., Joy Miesch, and J.R. Miesch,
    Inc., were ordered to comply with federal employment tax withholding
    and payment requirements. The court also barred the defendants from
    making any asset transfers that would prevent compliance with the
    Internal Revenue Code. J.R. and Joy Miesch are the president and
    treasurer of J.R. Miesch, Inc., a logging business based in Jasper,
    Texas. Since the fourth quarter of 2000, J.R. Miesch, Inc. allegedly
    has failed to fully pay Federal Insurance Contributions Act taxes
    and individual income taxes withheld in trust for J.R. Miesch,
    Inc.\'s employees.

-   Gregory T. Mayer, of Clearwater, Florida, and two companies
    controlled by Mayer---Legal Tax Newsletter, LC and Morton & Oxley,
    LTD.---were barred from preparing false or fraudulent income tax
    returns that understate tax liability and from selling fraudulent
    tax schemes, including schemes involving the improper use of trusts
    and other business entities. The court also barred Mayer from
    representing customers before the IRS in connection with past
    returns and directed him to provide a copy of the injunction to all
    his current and future customers.

-   Number range CHAPTERCharles Eden, a St. Louis truck driver, was
    enjoined from preparing federal income tax returns for others. Eden
    falsified or inflated his customers\' tax deductions for items such
    as charitable contributions and business expenses.

-   Linda Hendrieth, of Memphis, Tennessee, was barred from preparing
    income tax returns or claims for refunds. Hendrieth operates Taxing
    Solutions Plus, Inc., a tax return preparation business. Hendrieth
    allegedly overstated her clients' tax deductions without their
    knowledge as a means of increasing her tax return preparation fees,
    which were linked to the amounts of the refunds the returns claimed.
    Hendrieth either made up or vastly inflated claimed deductions, such
    as deductions for medical and dental expenses, property taxes,
    charitable contributions, and job-related expenses.

***Examples of Parallel Civil and Criminal Proceedings:***

The following examples illustrate how the government is proceeding
against tax cheats and abusive scam promoters on multiple fronts.

-   Number range CHAPTERJohn Cannon, of Hamden, Connecticut, allegedly
    prepared returns containing false itemized deductions and business
    and rental expenses. He also failed to file his own return for 2001.
    In June 2004, Cannon pleaded guilty to two counts of a 48-count
    indictment. He also consented to a permanent injunction prohibiting
    him from preparing returns in the future. He was sentenced to 48
    months and ordered to pay back taxes of \$188,000.

-   Number range CHAPTERMorris James promoted a slavery reparations
    scheme and charged elderly black farmers a fee to help them enter
    class-action settlement from Agriculture Department, although entry
    into that settlement was closed. The court entered a preliminary
    injunction against him in June 2003 and a permanent injunction in
    February 2004, barring him from promoting his reparations scheme. In
    November of 2004, he was convicted by a federal court in Oxford
    Mississippi of 23 counts of mail fraud.

-   Number range CHAPTERAl Thompson of Shasta Lake, California, doing
    business as Cencal Sales Co., failed to withhold federal taxes from
    employees\' wages, pay employment and unemployment taxes, and file
    tax returns and W-2 wage statements. Thompson has been described by
    the New York Times as an "advocate of the notion that American
    companies and their workers do not have to pay income taxes." He
    appeared on the television program "60 Minutes II," where he
    asserted that wages are not taxable and that employers therefore
    need not withhold federal taxes from their employees' wages. In
    September 2003, the court entered a preliminary injunction, ordering
    him to withhold and pay these taxes and to file returns and W-2
    statements. In November 2004, Thompson was indicted, along with
    co-defendant, Joseph Bannister, for conspiring to defraud IRS,
    filing false returns, and willful failure to turn over \$176,000 in
    employment taxes. In February 2005, he was convicted of 13 counts of
    filing false returns and failing to turn over employment taxes.

-   Number range CHAPTERDaniel and Brenda Meyers Fisher of Dallas, Texas
    were enjoined from promoting a tax scam involving sham partnerships
    and employment agreements. They filed false individual tax returns
    and partnership returns reporting personal income as business income
    and treating personal expenses as deductible expenses, and also set
    up "wealth management" companies that were used to evade paying
    employment taxes and to recoup employment taxes previously paid. In
    July 2004, Brenda Meyers-Fisher pleaded guilty to one count of bank
    fraud and one count of making a false statement in connection with a
    loan application. In December 2004, Daniel Fisher was found guilty
    of 34 counts, including aiding and assisting in the preparation and
    presentation of false and fraudulent tax returns, bank fraud, and
    perjury (based on false statements made at the civil injunction
    hearing).

Further details about these and other tax enforcement cases are
available on the Tax Division\'s website, <http://www.usdoj.gov/tax/> on
the IRS=s website, <http://www.irs.gov/>, and on the IRS Criminal
Investigation Division\'s website, <http://www.ustreas.gov/irs/ci/>.

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