Kansas-based Tax Scheme Promoter Convicted in $78 Million Fraud
WASHINGTON – Michael Craig Cooper today was convicted in Kansas City, Kan., on tax and fraud charges after a six week jury trial, the Justice Department and Internal Revenue Service (IRS) announced. Cooper was the president and founder of Renaissance - The Tax People, which was headquartered in Topeka, Kan.
According to the evidence introduced at trial, from 1997 until 2002, Cooper and others conspired to defraud the United States and Renaissance clients by marketing a program that purported to educate individuals on how to start a home based business in order to fraudulently convert personal expenses into business deductions through false and misleading representations. Cooper assisted clients in preparing and filing false tax returns on which the clients claimed tax deductions by falsely characterizing personal expenses as business expenses. In this manner, clients illegally reduced their taxable income by deducting personal expenses, including children’s allowances, commuting expenses, educational expenses and vacation expenses. This scheme was also promoted under the name Advantage International Marketing (AIM).
In December 2006, Cooper was charged in a superseding indictment with one count of conspiracy to defraud the United States, 56 counts of assisting in the preparation of a false tax return, 36 counts of mail fraud, 11 counts of wire fraud and 44 counts of money laundering.
“Citizens who pay their fair share of taxes can rest assured that the Department of Justice will continue to utilize all our resources to prosecute those who choose to cheat and engage in fraud,” said John A. Marrella, Deputy Assistant Attorney General of the Justice Department Tax Division. “To those citizens who choose to engage in tax fraud, our warning is: we are going to prosecute you and do our best to put you in jail.”
Cooper faces a maximum sentence of 20 years for each of the most serious counts of conviction and a fine of up to $250,000 for each count. The government also sought forfeiture of $84 million in proceeds from the fraud, including, United States currency, land, vehicles, gold coins, bank accounts and life insurance policies. U.S. District Court Judge Carlos Murguia will be holding a hearing on the forfeiture prior to sentencing, which is set for May 19, 2008. “Mr. Cooper exploited his customers and attempted to steal from the honest taxpayers of the United States,” said Eric F. Melgren, the U.S. Attorney for the District of Kansas. “Despite all the cunning marketing, Renaissance-The Tax People was nothing but a scam.” Defendants Daniel Joel Gleason, Jesse Lyala Cota, Todd Eugene Strand, Thomas Steelman Sr., Frances Ruth and Elizabeth Crotts pled guily to charges related to this scheme and testified at trial. Gleason, Cota, and Strand were charged in the indictment with Cooper.
Gleason, previously the owner and operator of a tax preparation service, My Tax Man, pled guilty on Oct. 10, 2006 to conspiracy to defraud the United States and aiding and assisting in the preparation of filing of false tax return. Cota, a former IRS District Director for the Southern District of California, plead guilty on March 27, 2006, to conspiracy to defraud the United States. Strand pled guilty on March 27, 2006, to conspiracy to defraud the United States and one court of mail fraud. In his plea, Strand admitted that the conspiracy defrauded Renaissance customers of more than $75 million and caused a tax loss of more than $20 million.
“Marketing programs to take illegal tax deductions through false and misleading representations, isn’t tax planning; it’s criminal activity,” said Eileen Mayer, Chief, IRS Criminal Investigation. “IRS Criminal Investigation has made the investigation of individuals who market or who intentionally buy into abusive tax schemes a national priority. Today’s conviction speaks strongly to our successful efforts in stopping this growing area of fraud.”
The case was prosecuted by Assistant U.S. Attorney Scott C. Rask and Justice Department Tax Division trial attorney Charles A. O’Reilly and was investigated by the IRS Criminal Investigation.
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