Rebuck and Commonwealth Trust Company

[Rebuck]

I was the Director of Operations for Commonwealth Trust Company in its last few years. I did serve my prison sentence for a conspiracy charge under title 18 ss 371. I have millions in restitution and hundreds of thousands of dollars I owe due to my past criminal activity in the sale of trusts and IBCs. I would like to help others to stay away from the path I took in the past.

In the other post the question came up whose name was on the offshore accounts? The name of the clients IBC. (International Business Corporation.) The client was the signatory on the account though the account was in a company name.

Did the client use the trust for his personal gain? Yes, off course! Do you think in these tax protestor trust schemes a client would turn over assets and relinquish all control to some one he doesn't know?

Most of our clients were people who did not file or had businesses they filed on but were looking for ways to hide income from the IRS. Our trusts worked well till the "moment of truth" arrived and the IRS infiltrated our company.

From the other thread it seems there is interest in my past experience. I do not recommend anyone do what I did. If one does not like the present tax system I recommend they change it through good new tax legislation.

I have spoken to the grudating seniors at Bucknell University in the forensic accounting class for the last two years. I am only saying things in my posts that are already in the public record. My hopes are that no one thinks Common Law Contract trusts and sovereign trustees are anything a U.S. Citizen should get involved with even though I assisted in opening offshore bank accounts in both trusts and IBCs and the compliance officers prior to 2003 looked at the documents and said to me if the funds are not from arms sales, drugs or prositution they will take the money.

Just because a trust looks legitimate and qualifies to be a share holder for an IBC with a bank in a good banking country like Cyprus doesn't mean it is right for a U.S. Citizen. Just because high profile people as bank V.P.s from Austria and Cyprus spoke at our meetings doesn't mean it was legal to use these entities to hide assets.

I am not a legal student of tax law or trust law. Others in the company claimed these credentials. I was the promoter and marketer of the product and it sold well because many people are looking for ways to hide assets. It was a big mistake! When I testified in court I only told what I knew to be true. Having testified in 6 cases, twelve days on the stand, six of those days being on the witness stand the entire day and defense attorneys still could not discredit my truthfullness. I hope that alone adds to my credability with our readers.

[Demosthenes]

Thanks, Wayne.

I get a lot of emails from worried family members of people who have bought into these schemes. Any advice for them on how best to deal with their loved ones?

[Judge Roy Bean]

Thanks for taking the time, Wayne - and as others have already said, welcome to Quatloos.

If you don't mind answering a question - something that has interested me as an observer of these kinds of cases for some years now - how long did Crim think he was going to be able to keep the ball rolling? Did he have an exit strategy and waited too long or did he really believe the IRS couldn't make their case against him?

Best of luck to you and your family.

[Rebuck]

Crim made plans to move to Malta in late 2002. He knew the lights would soon come down but did not admit it. I should have exited earlier but I did not know how to get property out of these entities rapidly and how to get back into the system without harming my family. In Dec. 2004 I entered into a plea agreement but I removed all assets from CTC entities asap after the 7-18-2003 raid (search) of 8 properties around the country all on the same day. I felt I had to be rid of all trust connections before "coming in" and pleading guilty.

Crim was a die hard sovereign. His sentencing transcript shows the judge's comment of his lack of remorse. Crim apparently thought he could continue to rake in the money while living in Malta. The IRS patiently waited till his mother passed away and when he came to her funeral they nabbed him.

I was so stupid as I was the face and voice of the meetings and conference organizer. The Gov. had more evidence against me it seemed than Crim. I know early losses are less than later losses so I did the right thing and cut my losses with a plea.

I am thankful to many people for help along the way. My criminal defense attorney James West (former U.S. Attorney in Middle district/ PA), my honest case agent who was always straight with me during years of cooperation and came with we to Bucknell this year to speak to the accounting class and Attorney Caroline Ciraolo of Baltimore who has been a "God-sent" person in helping me and my family clear up the civil issues after the criminal side was complete. She has helped me in a settlement agreement with the IRS and specializes in tax cases and offshore banking issues as mine. These three people were critical in the help they provided and I will be forever greatful to them.

[Dr. Caligari]

Werlcome to Quatloos, Rebuck. Good luck to you!

[Demosthenes]

How did Wesley Snipes get involved?

[wserra]

As I wrote in the other thread, welcome to Quatloos.

Were you ever threatened as a result of your cooperation in a manner that caused you real concern for your safety or that of your family? To the extent that you can reveal it, who was responsible and what did the govt do? It's pretty obvious, for example, that you're not in WitSec.

[Rebuck]

One of the sales persons I supervised sold Snipes. I never met him nor had any conversations with him though the law views the tax loss he created as part of my joint and several restitution. The conspiracy charge encompasses the people in management of the company and my culpabilty is truly there as I recruited some of the people who provided services for all the CTC clients including Snipes.

As for security the IRS CID, my case agent and other agents I had contact with all have been very sensitive to my security. I am not worried about my security though I am always vigilant. The IRS CID did install video recording equipment in or about 2005 to help in this area should there be any individual who attempted to retaliate due to my cooperation. That equipment is still running to this day though I do not know of other cases I may need to testify in. I have received 15 subpoenas to date due to my cooperation, several were from defense attorneys in cases where I already was a Gov. witness.

[Number Six]

Rebuck, I'm interested in the trust scam company in terms of the profile of your associates at the company. Were there no people smart enough or sufficiently competant legally to see the warnings that you were all headed for disaster? Did you or others have premonitions or that "sinking feeling" that the end was near? What politicians and religious figures were regarded positively by you and your associates?

I have seen in low-level sovereigns and their children an advanced sixth sense of when they are in trouble with the authorities before they get stopped by cops or are raided; were there no people around who saw the trouble coming?

[Rebuck]

Many of the Commonwealth clients were Christians, many were not. I for one did not ever move toward the sovereign status. I did not give up drivers license, insurance, car tags etc. as sovereigns often do. I did have a grudgeful attitude toward the IRS as I was audited several times while in college working full with three small children and the IRS audited my contributions to my church. I would think Government has better places to spend time and money than auditing poor me who was living in a cheap duplex in Pontiac, MI working full time and going to college with a wife and three kids under age six. I should not have held a grudge as the years went on but I did. I later put my five children through private Christain schools K through 12 each without a dime from the Gov. When I heard about the Commonwealth Trust Company 1995 I saw it as a way to become indigent. Many CTC clients beleived if they had no assets in their name and appeared indigent the IRS would not bother them. To some degree that was true as the IRS it seems only went after the higher net worth clients.

On the day of the raids (July 8, 2003) there were 3 or 4 CPAs in the meeting in the Flamingo Hotel in Las Vegas. There was also 3 or 4 non-CPA accountants and a retired State Judge who was practicing law after serving as Judge for 15 years. Three attorneys were taking part in that weekend conference. As I recall only one was in the room at the time of the raid. CTC clients were doctors, dentists, chiropractors, farmers, constuction business owners, land developers etc. Most were self employed. An IBC and two trusts cost about $11,750.00 so the typical sovereign guy could not come up with that amount of money.

I recall one meeting a commander of one of the Apollo missions spoke. I recall meeting with a V.P. of one of the "Big Three" auto companies in a Hotel in Atlanta in January of 2003. This person had already anonymous bank accounts in Cyprus and the Cyprus banker who was speaking at our conference in Atlanta introduced him to me. We only had a few high profile clients. The only one I know of that was charged was Snipes.

It seems to me there are so many business people cheating on their taxes that it was easy for them to make the transition to using trusts and IBCs as they were really fed up with the present system.

While I was cooperating with the IRS I worked for a management consulting company for a time and it was said within that company that many of the small businesses (with less than 100 employes) we targeted kept two sets of books. I think many tax payers are accustomed to lying on their tax returns. I once told AUSA Amy Kurland in Philadelphia, I thought it was more honorable to not file than to lie on my tax return. She went on to tell me the difference between misdemeaners and felonys in relation to lying on a return versus hiding assets in trusts.

I would like to see a more fair tax that doesn't penalize guys like me who don't want to take Government handouts to educate my small children and feed them. I felt the deductions allowed for my family were not always fair and favored people without children.

I wish the IRS was not so inept in some areas. Can you imagine my CID case agent took my $50,000 check which I was required to pay before sentencing per my plea agreement to deposit it a few floors below his office in the IRS building in Philadelphia and the worker at that desk refused to take that check for six months because of some procedure. This is true! He tried several times. This is the Case agent that brought down Commonweath Trust Company and prabably sent 20 or 30 of its clients to prison and scores of others who settled with the civil side of the IRS paying interest and penalties and he could not get my check accepted. Not a business in the country would have refused that check and I could have earned 3% or more interest for that six month period. The Gov. could have earned interest too! I must say my case agent is a good honest man and I thank God that there are some good people in Government!

There were few real red neck Sovereigns like John Crim and the trustees in CTC. Crim never spoke at our conferences either.

[fmmcosta]

The problem of this "trusts", provided by Commonwealth Trust Company, isn't they being Common Law (or whatever) Trusts. The problem here is the fraud and malpractice that they were involved in.

[Pantherphil]

You have almost figured it out, FMMCosta.

The so called "pure trusts" or "common law" trusts we see on these scan websites are in virtually all cases phony trusts used to perpetrate a fraud. And because the phony trust is used to perpetrate a fraud, a court is justified in disregarding the form of the trust and imposing consequences on the perpetrators of the fraud.

i draft trusts for a living. Trusts are very effective devices for personal and tax planning. There are statutory laws governing the creation and operation of trusts, common law decisions of courts governing the proper utilization of trusts, and tax statutes, both state and federal, which define the taxation of trusts. Many of these laws and rules are quite complex and very careful draftsmanship is required to accomplish the desired results. You need to study long and hard to be able to draft trusts effectively.

However, since the earliest days of "trusts" or "uses" under the common law of England, the common law courts and the equity courts recognized that the form of the trust could be abused to perpetrate fraud and judges of common law courts and chancellors of equity have developed common law case law or precedent which can be used to disregard or ignore a trust that is being used to perpetrate a fraud and make the assets held in trust available for legitimate creditors.. Common law has long concluded that a debtor could not create a trust for his own benefit for the purpose of defrauding legitimate creditors and taxes. Many of these doctrines developed at common law have been incorporated into statutes-- you might want to take a look at the uniform fraudulent transfer act or the uniform fraudulent conveyance act or the provisions of the U.S. bankruptcy code for some examples of the way that statutory law can be used to attack fraud. Or take a look at those states which have adopted the Uniform Trust Code as was pointed out to you by LPC. The Trust Code has an entire chapter dealing with the rights of third party creditors to pursue assets held in trusts. Or study the thousands of decisions of state and federal courts involving remedies for fraud, mistake, duress,constraint, undue influence. And, of course, there are criminal statutes for folks who engage in fraud as well (including tax fraud and evasion which is one of the principal subjects of this forum).

You can if you know what you are doing use trusts effectively to minimize taxes and to protect your assets from claims but these scam sites don't fill the bill and typically leave the folks who try to implement their schemes worse off than they started.

[fmmcosta]

@ Pantherphil,

I already understood that as I mentioned on the other thread and I'm all in favor of it because... it's fraud, malpractice, phony trusts, etc and this has to be attacked.

I also understand that "A man who uses his rights, harms no one."

[Rebuck]

Pantherphil's comment about individuals not being able to legally form a trust to keep property from creditors is one point the Commonwealth clients all knew was wrong. The Commonwealth home study guide encouraged the practice of purchasing an aged trust whose creation was several years prior to a client purchasing the right to use the instrument therefore when a (bogus) lien was created by the trust against the properties which client wanted protected it would be more difficult for that creditor to gain access to that property.

If you go to http://www.maricopa.gov and search the records you wil probably find 20,000 or more Commonwealth Trusts recorded. You can see the 14 page indentures there online and see John Crim, Steven Duke, JJ Barajas, Michael Cote and others who all had a part in this fraudulent scheme. If you are interested search John Michael Crim and you will see thousands of trusts.

I might add I have met many attorney's who might not directly take part in the formation of that trust and creation of a bogus lien but they encouraged their clients to make this move when a creditor was on the horizon.

Another tactic used was for a business person to create some expenses to a trust as a management company. That trust wired its trustee service fees (not to the trustee) but the that same business person's offshore bank account which showed no connection to the client on the wire instrutions. That clients instructed his college kid to apply for a grant to a different trust that used a mail forwarding service some where in several different states far from the clients home so the creditor could not connect the dots. Documents would be created and signed by a trustee ( who was paid about $20.00 for his signature) indicating the grant was awarded and the funds then wired to the college for final credit to the students account.

All of the IBC comapnies and trust companies provided mail forwarding services so trust mail and IBC bank mail would not go directly to the client. The mail forwarding service charged by the piece to put the mail in a larger envelope so no one really knew where it came from. (until the IRS opened it).

So the business man got the tax deduction from his front company there was a contract to a trust which may have filed a 1041 return with as many expenses as income (all fabricated). The offshore IBC was protected so no one knew who really cotrolled the account and the funds were re-patriated from a source that could not be traced to the Dad. And the kid could have a no-name debit card to get "walk-around" cash so long as he did not rat his dad out and tell anyone he had an offshore debit card. Dad's name was no where in any public record yet he had all the control.

All fraud ! yes but in my experience this is common practice in the trust and off-shore banking world.

[fmmcosta]

Individuals can use trusts to protect their assets from future creditors but cannot protect them from present creditors, because, obviously, it's fraud.

[Prof]

Individuals can use trusts to protect their assets from future creditors but cannot protect them from present creditors, because, obviously, it's fraud.

Still an "F" answer. In most states, an individual cannot place assets into a self-settled trust and then claim protection (what is called a "spendthrift trust"). A person can use his own assets to set up a trust for a third person -- i.e., the impecunious son. Even then, the transfer of funds for son's benefit should usually be governed by the state's fraudulent conveyance law (or in addition, 11 U.S.C. sec. 548 in bankruptcy) Section 548 transfers and those under the fraudulent conveyance acts protect present and future creditors, depending on circumstances.

In those states like Alaska and Delaware, where self-settled trusts for asset protection are permitted, I believe I am correct in stating that the laws on fraudulent conveyances apply, and that statute generally has a minimum 4 year limitations period or, in the alternative, a discovery rule.

Simply transfering a home into a trust, where the home is already the homestead, is risky. Although most bankruptcy judges have ruled that the transfer into a trust does not affect the exemption, that probably is incorrect result-oriented jurisprudence. I haven't followed the developments in this area lately, so I do not know what the current state of the law is.

[LPC]

Individuals can use trusts to protect their assets from future creditors but cannot protect them from present creditors, because, obviously, it's fraud.

Still an "F" answer. In most states, an individual cannot place assets into a self-settled trust and then claim protection (what is called a "spendthrift trust").

That was the result at common law (probably based on the Statute of Elizabeth, enacted in 1570, which was the first fraudulent transfer act), and it's the result under the Uniform Trust Code:

SECTION 505. CREDITOR’S CLAIM AGAINST SETTLOR.

(a) Whether or not the terms of a trust contain a spendthrift provision, the following rules apply:

(1) During the lifetime of the settlor, the property of a revocable trust is subject to claims of the settlor’s creditors.

(2) With respect to an irrevocable trust, a creditor or assignee of the settlor may reach the maximum amount that can be distributed to or for the settlor’s benefit. If a trust has more than one settlor, the amount the creditor or assignee of a particular settlor may reach may not exceed the settlor’s interest in the portion of the trust attributable to that settlor’s contribution.[...]

[Cpt Banjo]

Simply transfering a home into a trust, where the home is already the homestead, is risky. Although most bankruptcy judges have ruled that the transfer into a trust does not affect the exemption, that probably is incorrect result-oriented jurisprudence. I haven't followed the developments in this area lately, so I do not know what the current state of the law is.

Under Section 41.0021 of the Texas Property Code (effective 9-1-2009), one can place a homestead in a qualifying trust without losing the homestead exemption.

[michaelc1]

I need help as I purchased one of these trust back in 1992. I put real property in the trust name and now need to sell it. The attorney will NOT issue the title insurance as he is saying that there is nothing in the trust that allows me as the manager to transfer real property. He is now asking for the trustees to issue permission. That is hard when some are dead, and some in prison.
ANY Suggestions? This is a mere 10 acres of property so not a landfall in profit by any means.

[darling]

The attorney will NOT issue the title insurance as he is saying that there is nothing in the trust that allows me as the manager to transfer real property. He is now asking for the trustees to issue permission. That is hard when some are dead, and some in prison.
ANY Suggestions?

You would probably need to talk to a local trust attorney: a lot depends on the trust language and relevant state law. Here are some general topics you might want to discuss with your attorney:

- Whether or not the trust is valid. Assuming it is:
- The trust might give you the right to remove/replace the remaining trustees.
- State law might disqualify felons from serving as trustees.
- The living trustees might be willing and able to resign. Or sign whatever is needed.
- State law might allow you to revoke or reform the trust.