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Freezes $500 Million...
FOR
IMMEDIATE RELEASE
THURSDAY, NOVEMBER 4, 2004
WWW.USDOJ.GOV
|
TAX
(202) 514-2007
TDD (202) 514-1888 |
COURT FREEZES $500 MILLION THAT JUSTICE
DEPARTMENT ALLEGES WAS PAID TO FIRMS RUNNING FRAUDULENT INSURANCE AND FCHARITY
SCHEMES
Court Papers Allege More Than 3,500
Doctors and Dentists Participated in Program Run by San Diego-based xélan
Firm
WASHINGTON D.C. - Eileen J. O’Connor, Assistant Attorney General for
the Tax Division of the Department of Justice, and Carol C. Lam, United States
Attorney for the Southern District of California, announced today that a federal
court in San Diego, California, has issued a temporary restraining order to
California-based xélan, Inc., and a number of related entities and persons
affiliated with the xélan family of companies.
According to court papers unsealed today, persons and entities affiliated
with xélan have advised thousands of medical professionals primarily
doctors to place income in various fraudulent tax avoidance schemes employing
purported supplemental insurance products or improper charitable deductions.
The individual defendants named in the suit are L. Donald Guess and Monte
T. Mellon of California, Leslie S. Buck of Maryland, David Jacquot now living
in Idaho, G. Thomas Roberts of Pennsylvania, and Chris G. Evans and Nigel Bailey
of Barbados.
The order freezes over $500 million in bank and investment accounts. The court
also appointed a temporary receiver to preserve assets for the payment of taxes
or other claims by defrauded parties. The court also ordered Guess, Mellon,
Buck, Jacquot and Roberts to surrender their passports to the United States
Marshal and not to leave the United States.
According to the government’s complaint, more than $500 million is held
in investment accounts controlled by xélan-related and Barbados-based
Doctors Benefit Insurance Co.
Court filings also state that millions of dollars in doctor-provided funds
have been diverted, with some funds used to pay legal fees and other liabilities
of defendants Guess, Buck, Jacquot, xélan and affiliated entities.
According to the complaint, the IRS estimates that the defendants have sold
their fraudulent tax reduction schemes to approximately 4,000 doctors, with
the result that those doctors could now owe as much as $420 million in taxes
plus interest and penalties. Agents of the IRS’s Small Business/Self-Employed
Division are investigating those liabilities.
“
This action protects the government’s interest while we complete the
investigation,” said Kevin M. Brown, Commissioner of the IRS’s
Small Business/Self-Employed Division.
“The Justice Department will use the full complement of tools available
under federal law to protect the Treasury from schemes that shift the tax burden
to law-abiding taxpayers,” said Eileen J. O’Connor, Assistant Attorney
General for the Justice Department’s Tax Division. “That includes
asking courts to appoint receivers to take control of and preserve assets for
the payment of taxes due.”
The court set a hearing in San Diego for November 18, 2004 to determine whether
to extend the relief granted by the temporary restraining order and to consider
whether to order the defendants to repatriate any assets held offshore.
Anyone who participated in any xélan programs who would like information
on how to make a claim in the receivership should contact the Receiver, William “Biff” Leonard,
by telephone at (702) 262-9322 or by e-mail at biffer@sprynet.com.
The Justice Department has sought and obtained injunctions against a number
of tax-scam promoters. More information about these cases is available on the
Justice Department website at http://www.usdoj.gov/tax/taxpress2004.htm. More
information about the Justice Department’s Tax Division can be found
at http://www.usdoj.gov/tax.
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04-732
Xelan Victims Information