U.S. Sues Two Men to Block Alleged Tax Fraud Schemes Said to Have Cost U.S. Treasury Hundreds of Millions
WASHINGTON – The United States has sued two attorneys, Allen R. Davison of Overland Park, Kan., and A. Blair Stover Jr. of Platte City, Mo., and Beverly Hills, Calif., to block the men from promoting alleged tax fraud schemes, the Justice Department announced today. The government complaints, filed in U.S. District Court in Kansas City, Mo., allege that the two have helped wealthy customers evade income taxes by devising elaborate tax fraud schemes that use sham corporations. The suits ask that the defendants be permanently barred from giving tax advice or representing customers before the Internal Revenue Service (IRS).
According to the government’s complaints, Davison, who is licensed to practice law in Nebraska and is also a certified public accountant, is reportedly known as “Dr. Poof” for his purported ability to make customers’ tax liabilities disappear. Stover is a licensed attorney in Missouri, and, according to the complaint, is director of tax services at the accounting firm Kruse Mennillo, LLP.
The complaints further allege that one scheme that the two men have promoted involves helping customers establish sham corporations whose stock is unlawfully owned entirely by customers’ Roth Individual Retirement Accounts (IRA). These sham corporations allegedly receive payments from customers’ businesses for bogus management services. The payments are then allegedly distributed to the customers’ Roth IRAs with the customers failing to report or pay income tax on their business income.
The government complaint alleges that one Stover customer used the sham Roth IRA scheme for four years to evade reporting and paying federal income tax on more than $57.6 million in income, obtaining an improper tax savings of more than $20 million.
In a scheme described in the complaint against Davison, his customers are alleged to have falsely claimed to operate chicken farms in order to claim tax deductions available only to small farmers. In an example given in the complaint, one Davison customer who used the scheme—a highly compensated insurance broker from Mission Hills, Kan., who claimed $1.25 million in chicken flock deductions over three years—admitted to the IRS that he had never been a farmer.
In another scheme, Davison allegedly has helped customers claim bogus disabled-access tax credits when the customers have really incurred no expenses to make their workplaces accessible for the disabled.
Since 2001, the Justice Department’s Tax Division has obtained more than 310 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website, as is information about the Justice Department’s Tax Division.
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