2 St. Paul residents indicted in scheme to defraud IRS of $1 million

Rhoda Fukushima

Aug. 22, 2008 (McClatchy-Tribune Regional News delivered by Newstex) -- Two people from St. Paul and four others -- allegedly involved with an anti-tax "common law" movement -- were charged this week with conspiracy to defraud the Internal Revenue Service of more than $1 million, the U.S. Attorney's office said today.

Timothy Paul McCarthy 62, of St. Paul, has been charged with one count of conspiracy and two counts of aiding a false tax return. Laurie Therese Strohbeen, 51, of St. Paul, was charged with one count of conspiracy and one count of filing a false tax return.

In addition, Douglas Earl Leiter, 40, of Minneapolis, was charged with one count of conspiracy to defraud the IRS, one count of filing a false tax return and one count of aiding a false tax return.

Brian Keith Scott, 42, of Zimmerman, was charged with one count of conspiracy, one count of filing a false tax return and two counts of aiding a false tax return.

Mark David Maxwell, 52, of Minneapolis, and Christopher Craig Robinson, 35, of Plymouth, were each charged with one count of conspiracy and two counts of aiding a false tax return.

The indictment alleges that:

Between June 2001 and October 2004, the six conspired to defraud the IRS, particularly by impairing the collection of income taxes. They also helped prepare and present false and fraudulent tax returns.

In June 2001, Leiter, McCarthy and Strohbeen helped create a company that did business as Common Law Venue. The six also helped create two other companies used to form Commercial

Law Consultants in Washington state.

The six used their own names and the names of the organizations to file false tax returns for themselves and others, and to get fraudulent refunds of federal and state income taxes and Social Security and Medicare taxes that had been withheld.

They also advised and helped others file false tax returns, created clubs and companies to conceal income and submitted false documents to the IRS and other government entities.

They charged their clients a fee for their "services." If the client got a refund, they also charged the client a percentage of the refund.

The prepared tax returns featured a false Form 1041 in which people claimed they were a trust, rather than filing as individuals. The person would then deduct most, if not all, the income as a "fiduciary fee" and reported little or no taxable income and little or no taxes owed. The person would then claim a refund of all or nearly all of the federal income tax withheld.

They also prepared and advised others how to prepare and file false Form 1040, an individual income tax return, with a false Schedule A itemized deductions.

They also created limited-liability companies for clients owned by supposed nonprofit clubs that the clients controlled. Company profits were attributed to the clubs and clients used club money for personal expenses. Profits were passed through to the clubs, which did not file tax returns.

The clients did not report the income to the IRS or the Minnesota Department of Revenue.

The potential maximum penalty on the conspiracy count is five years in prison.

The potential maximum penalty on each filing false tax return count is three years.

The potential maximum penalty on each aiding false tax return count is three years.

Newstex ID: KRTB-0190-27610041