Dr. Poof and the case of the invisible chicken flock

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
THURSDAY, FEBRUARY 21, 2008 (202) 514-2007
http://WWW.USDOJ.GOV TDD (202) 514-1888

U.S. SUES TWO MEN TO BLOCK ALLEGED TAX FRAUD SCHEMES
SAID TO HAVE COST U.S. TREASURY HUNDREDS OF MILLIONS
One Defendant Allegedly Known as “Dr. Poof” for his Supposed Ability to Make Taxes Disappear

WASHINGTON – The United States has sued two attorneys, Allen R. Davison of Overland Park, Kan., and A. Blair Stover Jr. of Platte City, Mo., and Beverly Hills, Calif., to block the men from promoting alleged tax fraud schemes, the Justice Department announced today. The government complaints, filed in U.S. District Court in Kansas City, Mo., allege that the two have helped wealthy customers evade income taxes by devising elaborate tax fraud schemes that use sham corporations. The suits ask that the defendants be permanently barred from giving tax advice or representing customers before the Internal Revenue Service (IRS).
According to the government’s complaints, Davison, who is licensed to practice law in Nebraska and is also a certified public accountant, is reportedly known as “Dr. Poof” for his purported ability to make customers’ tax liabilities disappear. Stover is a licensed attorney in Missouri, and, according to the complaint, is director of tax services at the accounting firm Kruse Mennillo, LLP.
The complaints further allege that one scheme that the two men have promoted involves helping customers establish sham corporations whose stock is unlawfully owned entirely by customers’ Roth Individual Retirement Accounts (IRA). These sham corporations allegedly receive payments from customers’ businesses for bogus management services. The payments are
then allegedly distributed to the customers’ Roth IRAs with the customers failing to report or pay income tax on their business income.
The government complaint alleges that one Stover customer used the sham Roth IRA scheme for four years to evade reporting and paying federal income tax on more than $57.6 million in income, obtaining an improper tax savings of more than $20 million.
In a scheme described in the complaint against Davison, his customers are alleged to have falsely claimed to operate chicken farms in order to claim tax deductions available only to small farmers. In an example given in the complaint, one Davison customer who used the scheme—a highly compensated insurance broker from Mission Hills, Kan., who claimed $1.25 million in chicken flock deductions over three years—admitted to the IRS that he had never been a farmer.
In another scheme, Davison allegedly has helped customers claim bogus disabled-access tax credits when the customers have really incurred no expenses to make their workplaces accessible for the disabled.

Since 2001, the Justice Department’s Tax Division has obtained more than 310 injunctions to stop the promotion of tax fraud schemes and the preparation of fraudulent returns. Information about these cases is available on the Justice Department website, as is information about the Justice Department’s Tax Division.

[LPC]

This looks like just plain fraud to me. Where's the delusion?

[Demosthenes]

This looks like just plain fraud to me. Where's the delusion?

Sorry, I posted it in the wrong forum and it took me a few minutes to find the link in this new BB version to move the thread.

[wserra]

Great nickname. It may acquire an entirely new meaning in the joint, however.

[Demosthenes]

http://www.kansascity.com/105/story/500299.html

The complaint against Davison did mention prominent Kansas City businesswoman V. Cheryl Womack as having hired Davison as an in-house tax consultant and adviser when she owned the National Association of Independent Truckers.

After Womack sold the business in 2002 for more than $25 million, Davison continued to work for her as an investment adviser, the complaint said.

Reached Thursday, Womack vehemently defended Davison, whom she said “probably knows more about tax law than any person I’ve ever met.”

“I hired him, because when you’re in the insurance business, there are so many rules you need to know. And the IRS and the government are very punitive about your not being knowledgeable about what the laws are,” she said.

“It made a lot of sense for me to have somebody here. And I paid plenty of friggin’ taxes. I never got mine ‘poofed’ away.”

Womack acknowledged that she had gotten involved in chicken farming at Davison’s suggestion. She insisted that it was a legitimate business.

“I just think somebody doesn’t have their facts here,” she said. “Because I know that some of the investments that Al is in, and has involved other people in, are in chicken farming and they have literal chicken farms that produce liquid eggs for McDonald’s. I know about the business and it’s extremely legitimate.”