Promoters of "We the People" Tax Fraud Group Sentenced

[IRS] On June 7, 2005, in Los Angeles, CA, five individuals associated with a tax fraud group known as "We the People" were sentenced for promoting bogus tax shelters that falsely promised to limit exposure to federal income taxes.  Lynne Meredith, the leader of the operation, was sentenced to 121 months in prison.  Gayle Bybee was sentenced to 60 months in prison;  Teresa Manharth Giodano was sentenced to 40 months in prison; Willie Watts was sentenced to 36 months in prison; and Gregory Paul Karl was sentenced to 20 months in prison.  Two more defendants in this case, Nora Moore and Betty Erickson, are scheduled to be sentenced on June 20, 2005.

On May 3, 2004, all seven individuals were convicted on various counts in the indictment including failure to file income tax returns, conspiracy, and mail fraud.  During the 13-week trial, evidence showed that the defendants assisted taxpayers in forming phony “pure trusts” to conceal income and assets from the government. Also, the defendants falsely told their customers that paying taxes was “voluntary” and that they should file a W-4 or W-8 form with their employer claiming to be exempt from federal tax withholding and encouraged taxpayers to send protest correspondence to the IRS with the purpose of impeding and obstructing the IRS from collecting these taxpayer’s taxes.

Trial evidence also illustrated that beginning in 1991 and continuing until April 2002, Meredith conducted seminars at which she sold books and bogus “pure trusts” to people with the purpose of leading them to believe they could legally shield income and assets from taxation. Meredith also wrote books including “How to Cook a Vulture” and “Vultures in Eagle’s Clothing,” in which she falsely claimed that individuals could lawfully stop paying income taxes, stop their employer from withholding income taxes, and refuse to produce financial books and records to the IRS.  The books contained examples of frivolous tax returns and protest letters.  Meredith earned more than $8.5 million as a result of the scheme and, as with the other defendants, did not file a Federal income tax return during these years.

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The upshot from this is that the LPPa should be careful with whom it associates.  We are working within the system to cut government spending drastically and cut taxes drastically; it's not going to help us to associate with criminals purveying bogus tax shelters.  In the meantime, do take every legitimate tax deduction you can!

Dave:

I agree with your points; I was unaware that the CA group is not affiliated with the NY group.  What I do want to get across is that the LPPa cannot be seen as advocating setting up illegal tax shelters.  Frankly, there are plenty of ways of setting up trusts legally to shelter wealth from taxation; a great way is to set up a Charitable Remainder Unit Trust--just go to your local library and find a book or two on this topic, and proceed.