Justice Department Sues to Halt Promoters of Alleged Tax-fraud Scheme in North Carolina

WASHINGTON - The Justice Department announced today it has sued two North Carolina men to stop an alleged tax fraud scheme that uses sham trusts to help customers evade taxes. The civil injunction suit was filed in U.S. District Court in Asheville, N.C., against Alexander Klosek, of Etowah, N.C. and Bryan Noel of Hendersonville, N.C.

According to the government complaint, Klosek and Noel and their businesses—Pinnacle Financial and Trust Group, Pinnacle Advisors, Silverado Financial Group, and Certified Estate Planners—sell sham trust packages that improperly reduce or eliminate customers’ reported federal income taxes. The suit also seeks to bar the defendants from preparing federal income tax returns and to require them to turn over their customer lists to the government.

The complaint alleges that Noel and Klosek target wealthy elderly customers and advise them to transfer their houses and other assets to sham trusts. The government alleges that the defendants falsely advise customers that these trusts allow customers to claim deductions for house payments, utilities and other non-deductible personal expenses. The complaint says that IRS estimates the loss to the U.S. Treasury from the defendants’ scheme is more than $55 million.

Since 2001, the Justice Department has obtained injunctions against more than 255 tax preparers and tax-fraud promoters. More information about these cases is available on the Justice Department Web site at www.usdoj.gov/tax/taxpress2007.htm. More information about the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax.