United States Attorney
Southern District of New York
JANUARY 14, 2011 ELLEN DAVIS,
LawFuel.com -PREET BHARARA, the United States Attorney for the
Southern District of New York, announced that Chicago attorney
and certified public accountant JOHN B. OHLE III and Louisiana
attorney WILLIAM BRADLEY were sentenced in Manhattan federal
court yesterday to five years and one year in prison,
respectively, in connection with a scheme to fraudulently obtain
referral fees relating to a tax shelter transaction and then
failing to accurately report those fees to the Internal Revenue
Service (“IRS”) and pay taxes. OHLE and BRADLEY were convicted
in June 2010 of conspiracy to commit wire and tax fraud. OHLE
was also convicted of two counts of tax evasion based on his
failure to report to the IRS millions of dollars he embezzled
from a trust and the fraudulently obtained referral fees and
fraudulent tax shelter deductions used to offset reported income.
According to the evidence presented at the three-week
trial and other court proceedings before U.S. District Judge JED
S. RAKOFF, who also imposed the sentences:
Between 1999 and 2002, OHLE was a supervisor in the
Chicago office of Bank One’s “Innovative Strategies Group”
(“ISG”). The ISG provided tax shelter strategies for high net
worth clients, including a tax shelter called “Hedge Option
Monetization of Economic Remainder,” or HOMER, which OHLE
designed, marketed, and implemented together with others.
It was agreed that referral fees would be paid to
third parties who referred HOMER clients to OHLE and Bank One.
OHLE and BRADLEY conspired with others –- including DOUGLAS
STEGER, who previously pleaded guilty in this case — to create
false and fraudulent invoices to obtain secret referral fees for
certain HOMER tax shelter transactions, to which they were not
entitled. The secret receipt of the referral fees by OHLE and
BRADLEY served to reduce the total tax shelter fee that Bank One
was paid.
OHLE also fraudulently obtained over $4 million from a
client for whom he acted as trustee. A portion of those funds
was used by OHLE to carry out the fraud on Bank One with respect
to the tax shelter referral fees. OHLE also secretly obtained
$500,000 in profits from the HOMER tax shelter transactions
through a childhood friend who he had inserted into the
transaction, with the agreement to share the profits with OHLE.
OHLE failed to report the $500,000 as income on his tax returns,
scheming to have his friend report both his and OHLE’s profits,
and arranging for a fraudulent tax shelter to be used by the
friend to evade taxes on all the profits.
In addition to the conspiracy count, OHLE was found
guilty of tax evasion for the 2001 and 2002 tax years. With
respect to 2001, OHLE fraudulently omitted from his tax return
approximately $2.9 million in income, which was comprised of
unreported HOMER referral fees and funds stolen from his trust
client. For 2002, OHLE fraudulently omitted from his tax return
over $3.1 million in income, which was comprised of over $500,000
in HOMER tax shelter profits and over $2.5 million he embezzled
from his trust client. In addition to failing to report income
for 2002, OHLE also claimed over $4 million of false tax losses
stemming from a fraudulent tax shelter transaction that he
employed on his own tax return.
In addition to the loss amounts stemming from the
referral fee fraud and his tax evasion, OHLE was held
responsible, according to an order issued in September 2010 by
Judge RAKOFF, for approximately $100 million of losses claimed by
taxpayers who were enlisted by OHLE and others to engage in the
HOMER tax shelter. Judge RAKOFF found that HOMER was
“obvious[ly] fraudulent” because its “sole purpose” was to
generate tax benefits for the HOMER clients.
Judge RAKOFF ordered OHLE, 43, of Wilmette, Illinois,
to forfeit various proceeds of the fraud scheme, including
the $1,256,000 he received, as well as hundreds of thousands of
dollars of sports memorabilia OHLE purchased with monies
additionally derived from the fraud scheme.
Judge RAKOFF also ordered BRADLEY, 46, of Hammond,
Louisiana, to forfeit $255,000 of proceeds of the offense that
BRADLEY obtained through his attorney escrow account.
Mr. BHARARA praised the work of the IRS and thanked the
Department of Justice Tax Division for their assistance in this
case.
The prosecution was handled by Assistant U.S. Attorney
Stanley Okula and Nanette L. Davis, Assistant Chief with the
Northern Criminal Enforcement Section of the Tax Division.
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