PQI / SORCE indictment

[Demosthenes]

Tax-fraud charges keep Ashland man jailed
Federal hearing will determine if suspect held in conjunction with major operation is flight risk

By Chris Conrad
Mail Tribune
September 01, 2008 6:00 AM

A federal judge Tuesday will decide if an Ashland man accused of promoting tax-fraud schemes will await his upcoming trial at home or in jail.

Eugene "Gino" Casternovia, 59, was arrested Thursday at his home in the 100 block of Crispin Lane and charged with conspiracy to commit money laundering. He remains lodged in the Jackson County Jail without bail.

According to a U.S. Department of Justice civil injunction filed in April, Casternovia presented and sold tax-fraud schemes at various trade shows and conferences around the world, including a 400-person conference aboard a cruise ship in the Mediterranean Sea in May 2007.

The injunction states Casternovia's company, Southern Oregon Resource Center Educational Services (SORCE), worked as a vendor for a Florida-based company, Pinnacle Quest International (PQI), to promote the scams, which involved the use of fabricated offshore accounts to help customers conceal their assets.

In addition, Casternovia allegedly told customers that the federal income tax system is voluntary and that his customers could opt out of their tax obligations by revoking or not using their Social Security and other government identification numbers.

The complaint filed against PQI alleges that the organization has 830 salespeople, thousands of customers, and gross sales from 2002 through 2006 of approximately $54 million. During the same period, PQI's leaders allegedly received commissions from sales of PQI products of approximately $8.8 million.

SORCE charged customers a fee for the alledged fraudulent tax advice. The company had at least 350 customers, according to the injunction.

Casternovia's three SORCE employees — Rod Pendell of Ashland, Mark Lyon of Williams and Robert Hagopian of Las Vegas — were also named in the injunction.

"The size and sheer brazenness of the tax defier activities alleged in these complaints are staggering," Nathan J. Hochman, Assistant Attorney General for the Justice Department's Tax Division, said in a statement released to the media. "Tax defiers sometimes claim to be 'patriots,' but those who push bogus tax schemes are nothing more than con artists, and those who pay for these schemes are buying nothing but trouble."

Casternovia's arrest at the hands of U.S. Treasury agents last week came as no surprise to his wife, Kathryn Casternovia.

"We expected this to happen, but it was unnecessary for them to take my husband in custody at gunpoint," she said. "The IRS has a reputation for intimidation and they really lived up to it this time."

Kathryn Casternovia refused comment on questions pertaining to the charges against her husband. She did say her husband only argued against the income tax system and they pay all other taxes.

The couple has lived in Ashland for 25 years and owned the now defunct Northlight vegetarian restaurant and the Rainforest Cafe.

"We are well into the community in Ashland," she said. "We have several friends who have voiced support for Gino."

Casternovia is hoping these friends show up Tuesday to the federal courthouse in Medford to convince the judge that he is not a flight risk and should be trusted to stay in the country until his trial.

"We are calling on people to stand behind him," Kathryn Casternovia said. "Gino is a man of principle and will do what he says he's going to do."

Casternovia faces a possible 25-year prison sentence and a $750,000 fine upon conviction.

"It's pretty scary to imagine my husband could be gone," Kathryn Casternovia said. "But at the same time he knowingly chose this path. It is a moral issue for him."

[Demosthenes]

08/21/2008 3 SEALED INDICTMENT (PDF redacted per privacy policy) as to
CLAUDIA CONSTANCE HIRMER (1) count(s) 1, 2, 3, 4-10, 13
MARK STEVEN HIRMER (2) count(s) 1, 2, 3, 6, 11, 13
EUGENE JOSEPH CASTERNOVIA (3) count(s) 1, 2
ROBERT LEIGHTON PENDELL (4) count(s) 1, 2
MARK BARRY LYON (5) count(s) 1, 2
ELLEN MEREDITH STUBENHAUS (6) count(s) 1, 2, 5, 7, 9-10, 13
JOSEPH WILLIAM MCPHILLIPS (7) count(s) 1, 2, 4, 10, 13
ARNOLD RAY MANANSALA (8) count(s) 1, 2, 14
DOVER EUGENE PERRY (9) count(s) 1, 2, 14
MICHAEL GUY LEONARD (10) count(s) 1, 2, 6, 10-11, 13
MARK DANIEL LEITNER (11) count(s) 1, 2, 7, 15
ARTHUR RAMIREZ MERINO (12) count(s) 1, 2, 4-6, 8-9
JEFFRY JEAN JENKS (13) count(s) 2, 7, 9, 11-12

http://www.cheatingfrenzy.com/pqicrim1.pdf

[Judge Roy Bean]

Gino at work:

http://www.youtube.com/watch?v=f72DwS9CxHQ

[Quixote]

Gino at work:

http://www.youtube.com/watch?v=f72DwS9CxHQ

Who's the guy in part 2 who claims to be a law school professor?

[AFTP]

http://www.kmed.com/pages/landing/?MAN- ... feedID=133

MAN COULD GET 25 YEARS FOR TAX FRAUD

ABOUT 20 PEOPLE STOOD IN SUPPORT OF GINO CASTERNOVIA'S HEARING YESTERDAY IN THE FEDERAL COURTHOUSE IN MEDFORD.

EUGENE "GINO" CASTERNOVIA IS ACCUSSED OF PROMOTING TAX FRAUD SCHEMES AND COULD FACE 25 YEARS IN PRISON AND A 750-THOUSAND DOLLAR FINE.

OFFICIALS SAY HE PRESENTED AND SOLD TAX FRAUD SCHEMES AT TRADE SHOWS AND CONFERENCES AROUND THE WORLD.

HE REMAINED IN THE JACKSON COUNTY JAIL WITHOUT BAIL.

AMONG HIS CONFERENCES INCLUDED A 400 PERSON CONFERENCE ABOARD A CRUISE SHIP IN THE MEDITERRANEAN SEA IN 2007.

[Dezcad]

http://www.kmed.com/pages/landing/?MAN- ... feedID=133

MAN COULD GET 25 YEARS FOR TAX FRAUD

ABOUT 20 PEOPLE STOOD IN SUPPORT OF GINO CASTERNOVIA'S HEARING YESTERDAY IN THE FEDERAL COURTHOUSE IN MEDFORD.

EUGENE "GINO" CASTERNOVIA IS ACCUSSED OF PROMOTING TAX FRAUD SCHEMES AND COULD FACE 25 YEARS IN PRISON AND A 750-THOUSAND DOLLAR FINE.

OFFICIALS SAY HE PRESENTED AND SOLD TAX FRAUD SCHEMES AT TRADE SHOWS AND CONFERENCES AROUND THE WORLD.

HE REMAINED IN THE JACKSON COUNTY JAIL WITHOUT BAIL.

AMONG HIS CONFERENCES INCLUDED A 400 PERSON CONFERENCE ABOARD A CRUISE SHIP IN THE MEDITERRANEAN SEA IN 2007.

This story is clearly a fiction, given that it is in ALL CAPS

[Judge Roy Bean]

Gino at work:

http://www.youtube.com/watch?v=f72DwS9CxHQ

Who's the guy in part 2 who claims to be a law school professor?

Someone many months back indicated that was Cornforth. I'm not sure.

[AFTP]

After watching this video and putting aside the “sovereign” nonsense I have to wonder if these entities would be legal if they paid U.S. taxes.
I’ve heard of Foundations and IBCs.
They aren’t illegal right?

[Demosthenes]

Another of the 13 defendants was arrested on the 3rd.

U.S. District Court
United States District Court for the Western District of Washington (Seattle)
CRIMINAL DOCKET FOR CASE #: 2:08-mj-00387-MAT-1

Case title: USA v. Manansala
Other court case number: 3:08cr79-008/MCR Northern District of Florida, Pensacola

Date Filed: 09/02/2008

--------------------------------------------------------------------------------
Assigned to: Judge Mary Alice Theiler

Defendant (1)
Arnold Ray Manansala represented by Robert Harris Gombiner
FEDERAL PUBLIC DEFENDER'S OFFICE (SEA)
1601 5TH AVE
STE 700 WESTLAKE CENTER OFFICE TOWER
SEATTLE, WA 98101
206-553-1100
Fax: FAX 553-0120
Email: robert_gombiner@fd.org
TERMINATED: 09/04/2008
LEAD ATTORNEY
ATTORNEY TO BE NOTICED
Designation: Public Defender or Community Defender Appointment

Allen R Bentley
1111 THIRD AVE
STE 2220
SEATTLE, WA 98101-3207
206-343-9391
Fax: FAX 682-3746
Email: abentley@concentric.net
ATTORNEY TO BE NOTICED

Pending Counts
Disposition
None

Highest Offense Level (Opening)
None

Terminated Counts
Disposition
None

Highest Offense Level (Terminated)
None

Complaints
Disposition
18:371, 1343, 1956(h) Conspiracy to Defraud the US and Money Laundering; Wire Fraud

--------------------------------------------------------------------------------

Plaintiff
USA represented by Richard Edward Cohen
US ATTORNEY'S OFFICE (SEA)
700 STEWART ST
STE 5220
SEATTLE, WA 98101-1271
206-553-7970
Fax: 206-553-6934
Email: Richard.E.Cohen@usdoj.gov
LEAD ATTORNEY
ATTORNEY TO BE NOTICED

Date Filed # Docket Text
09/02/2008 Arrest of Arnold Ray Manansala on 9/2/2008. (HAZ) (Entered: 09/03/2008)
09/02/2008 1 CHARGING DOCUMENT RECEIVED FROM OTHER COURT as to Arnold Ray Manansala (Attachments: # 1 warrant)(HAZ) (Entered: 09/03/2008)
09/02/2008 3 ORDER APPOINTING FEDERAL PUBLIC DEFENDER appointing Robert Harris Gombiner for Arnold Ray Manansala by Judge Mary Alice Theiler. (HAZ) (Entered: 09/03/2008)
09/02/2008 4 MOTION for Detention by USA as to Arnold Ray Manansala (HAZ) (Entered: 09/03/2008)
09/02/2008 5 Minute Entry for proceedings held before Judge Mary Alice Theiler- CRD: HAZ; AUSA: R COHEN; Def Cnsl: R GOMBINER; PTS: C KNUDSEN; Time of Hearing: 2:30 PM; Courtroom: 12B; INITIAL APPEARANCE IN RULE 5(c)(3) PROCEEDINGS as to Arnold Ray Manansala held on 9/2/2008. CT reviews financial affidavit and appoints counsel. Defendant advised of rights and charges pending in ND-FL, Pensacola. Govt moves for detention, hearing set. Defendant(s) remanded to custody.
Detention Hearing set for 9/5/2008 at 01:30 PM before Judge Mary Alice Theiler. (HAZ) (Entered: 09/03/2008)
09/04/2008 6 NOTICE OF ATTORNEY SUBSTITUTION Allen R Bentley is substituted as counsel for dft Arnold Ray Manansala. Attorney Robert Harris Gombiner terminated. (Bentley, Allen) (Entered: 09/04/2008)

[AFTP]

http://www.mailtribune.com/apps/pbcs.dl ... /809050336

Court rules tax-fraud trio are flight risks
So they'll stay in the Jackson County Jail until trial begins in Florida

By Sanne Specht
Mail Tribune
September 05, 2008

An Ashland man and two of his employees will remain in custody as they await transfer to Florida to face trial for their alleged participation in a federal tax-fraud scheme.

U.S. District Court Judge Mark D. Clarke on Thursday told Eugene "Gino" Casternovia and Rod Pendell of Ashland, and Mark Lyon of Williams, that he had carefully considered the character testimony offered by friends and family stating the defendants were men of good character and could be trusted to appear in Florida if released. However, Clarke ruled the evidence presented by prosecutors shows the men say their permanent residence is Panama, and that they participated in an elaborate offshore tax evasion scheme designed to defraud the U.S. government of income tax revenues.

"The court finds it difficult to rule you are not a flight risk," Clarke told each defendant.

About 20 people attended Casternovia's hearing at the federal courthouse in Medford on Tuesday. Several more attended Thursday's hearing on behalf of Pendell and Lyon.

The U.S. Department of Justice contends Casternovia presented and sold tax-fraud schemes at various trade shows and conferences around the world, including a presentation for 400 people aboard a cruise ship in the Mediterranean Sea in May 2007.

Federal prosecutor Byron Chatfield told Clarke that Casternovia was a flight risk because he has successfully moved $3.4 million into offshore accounts, and an additional $1.2 million is "unaccounted for."

Casternovia represented himself at Tuesday's hearing, stating through tears he has known the indictments were coming since 2006. He has been in and out of the country several times and could have fled if that were his intent or character.

"I am not a flight risk," Casternovia said.

Casternovia and his wife, Kathryn, have lived in Ashland for 25 years and owned the now defunct Northlight vegetarian restaurant and the Rainforest Cafe. Kathryn Casternovia and her daughter, Amanda, wept and stood Thursday as Clarke ruled the men would remain in custody and marshals escorted the prisoners out of the courtroom.

The federal criminal injunction alleges Casternovia's company, Southern Oregon Resource Center Educational Services (SORCE), worked as a vendor for a Florida-based company, Pinnacle Quest International (PQI), to promote the scams, which involved the use of fabricated offshore accounts to help customers conceal their assets.

In addition, Casternovia allegedly told customers that the federal income tax system is voluntary and that they could opt out of their tax obligations by revoking or not using their Social Security and other government identification numbers.

Kathryn Casternovia said her husband is determined to fight the charges and will likely appeal Clarke's detention ruling — here or in Florida, she said.

"A lot of the charges and allegations are completely inaccurate and untrue," said Amanda Casternovia.

The defendants face possible 25-year prison sentences and $750,000 fines if convicted of conspiracy to commit money laundering. They remain lodged in the Jackson County Jail without bail.

Reach reporter Sanne Specht at 776-4497 or e-mail sspecht@mailtribune.com.

[ASITStands]

Gino at work:

http://www.youtube.com/watch?v=f72DwS9CxHQ

Who's the guy in part 2 who claims to be a law school professor?

Someone many months back indicated that was Cornforth. I'm not sure.

It is NOT Richard Cornforth!

And, for the record, Richard Cornforth is neither a paralegal, attorney or law professor. The only similarity between this man and Cornforth is both having a week-long law school.

Richard calls his, The Helm Society School. It's rumored Cornforth got referrals from PQI, and it appears the formation of his law school was an outgrowth of that association.

Richard Cornforth worked for AOL. He became friends with Dan Meador and Pat Patton, and somewhere along the line, Cornforth studied what's called the 'Law of Voids.' Eventually, when some people had success with his theories against credit cards, Meador and Patton presumed upon Cornforth to apply the same techniques to tax law. The rest is history.

Richard's truly a "nice" man, and he's not ignorant of law. He's reached different conclusions than most, and he follows more-or-less the Meador, Patton and Skinner legal theories.

[wserra]

he's not ignorant of law ... he follows more-or-less the Meador, Patton and Skinner legal theories.

Sorry, but that's a textbook example of cognitive dissonance.

[ASITStands]

he's not ignorant of law ... he follows more-or-less the Meador, Patton and Skinner legal theories.

Sorry, but that's a textbook example of cognitive dissonance.

Didn't say, "He's right!"

Ignorance comes in many forms. I've seen attorneys as ignorant as can be, and I've seen some who've studied so deeply (out of the wrong well) they put most attorneys to shame.

Sometimes it's a matter of perspective or maybe an experience. I don't know why people like Cornforth reach the conclusions they do, but I've learned not to denigrate their opinion too harshly lest I lose all ability to find a way to get them to question those conclusions.

It's not a matter of winning an argument but helping someone recognize error.

Anyway, I suspect your comment was in the form of humor, and though I've answered in the manner I have, I appreciate the contradiction in my words. I try to give the other man the right of being wrong, and that's why I expressed myself as I did about Cornforth.

I guess the subject is PQI / SORCE, and Cornforth has had a connection.

[Judge Roy Bean]

Which begs the question - who is that in the video?

[LPC]

The DOJ press release:

13 INDICTED BY GRAND JURY IN NATIONWIDE TAX DEFIER OPERATION
LED BY IRS CRIMINAL INVESTIGATION

September 2, 2008

Pensacola, Florida -- Thomas F. Kirwin, Acting United States Attorney for the Northern District of Florida, announced the unsealing of an indictment charging 13 individuals throughout the United States with conspiracy to impair and impede the Internal Revenue Service and to commit wire fraud, conspiracy to commit money laundering, and wire fraud, all as part of a nationwide tax defier movement which promoted the use of offshore trusts and foreign bank accounts as a way of evading federal income taxes. Two defendants are also charged with evasion of payment of income taxes. The charges include Title 18, United States Code (U.S.C.), Section 371 (Conspiracy), 18 U.S.C. 1956(h) (Conspiracy to commit money laundering), 18 U.S.C. Section 1343 (Mail Fraud), and U.S.C. 7201 (Willful Intent to Evade or Defeat Tax).

The individuals charged in the grand jury indictment are:

Claudia Constance Hirmer, age 49, of Niceville, Florida;
Mark Steven Hirmer, age 54, of Niceville, Florida;
Ellen Meredith Stubenhaus, age 49, of Lake Worth, Florida;
Dover Euguene Perry, age 34, of Renton, Washington;
Arnold Ray Manansala, age 40, of Renton, Washington;
Michael Guy Leonard, age 61, of Troy, New York;
Mark Daniel Leitner, age 36, of Fairport, New York;
Arthur Ramirez Merino, age 36, of Seattle, Washington;
Joseph William McPhillips, age 42, of Panama;
Eugene Joseph Casternovia, age 60, of Ashland, Oregon;
Robert Leighton Pendell, age 42, of Ashland, Oregon;
Mark Barry Lyon, age 52, of Williams, Oregon;
Jeffrey Jean Jenks, age 50, of Eugene, Oregon.

The indictment alleges that Mark and Claudia Hirmer operated "Pinnacle Quest International" (PQI), along with their related companies, "Synergy Productions International, Inc." (SPI) and "MCD Productions," in the Fort Walton Beach, Florida, area, where they sold memberships in their organization ranging in price from $1,350 to $18,750. The indictment alleges such memberships allowed users to gain access to various presentations, conference calls, DVD's, CD's and offshore conferences which Claudia Hirmer organized. It is alleged that PQI contracted with vendors, who gained exclusive access to the PQI membership in order to sell their products promoting anti-tax theories, offshore corporate structures, debt elimination tactics and offshore investment opportunities. It is further alleged that as part of the organization, PQI encouraged its members to refer clients to authorized vendors with the top selling PQI members being part of its "Executive Council, who included Ellen Stubenhaus Joe McPhillips Arnold Manansala Dover Perry Michael Leonard and Arthur Merino. According to the indictment, "Qualified Consultants" for PQI, who included Mark Leitner, were individuals authorized to sell various levels of memberships. Membership fees would be distributed to the "Qualified Consultants" and "Executive Council" members who recruited the member. The indictment alleges an Ashland, Oregon organization called "SORCE" (Southern Oregon Resource Center Educational Services) was among the vendors PQI used. Controlled by Eugene Casternovia and which employed Mark Lyon and Robert Pendell, the indictment alleges SORCE sold materials and services to create a complex system of offshore entities used to conceal assets.

According to the indictment, the vendors promoting offshore trusts were attempting to illegally exploit the general rule that non-resident aliens are not required to pay income tax on U.S. interest income, U.S. capital gains, or income from the sales of foreign properties or from foreign sources. The indictment alleges vendors did so by attempting to create a structure which gave the appearance that a non-resident alien was the owner of the assets when, in fact, a U.S. citizen was the owner. Alternatively, the indictment alleges some vendors promoted the use of a warehouse banking program called "MYICIS" which offered anonymous banking services and which would not honor IRS levies. In these ways, the indictment alleges members were misled by PQI's owners and the "Executive Council" to believe that vendor-offered products would allow them to legally pay no taxes, become free of debt, accumulate wealth, and protect their assets from the U.S. government and creditors.

Several of the charged defendants have been arrested and have appeared before United States Magistrate Judges in the jurisdictions of arrest. Mark and Claudia Hirmer first appeared before U.S. Magistrate Judge Elizabeth Timothy in Pensacola on August 28, 2008, at which time the United States requested they be detained without bond pending trial. A hearing on the matter of detention is scheduled for September 2, 2008, at 2:00 pm before U.S. Magistrate Judge Miles Davis. Defendants arrested in other states will appear in Pensacola on September 9, 2008, at 11:00 am before Judge Davis.

"There is no secret formula that can eliminate a person's tax obligations," said Eileen Mayer, Chief, IRS Criminal Investigation. "Taxpayers should be wary of scams and promises that claim to help avoid paying taxes."

"Today's unsealed indictment against the leaders of Pinnacle Quest International (PQI) shows that the Tax Division will utilize all its tools to stop promoters of illegal tax defier schemes," said John Marrella, Deputy Assistant Attorney General of the Justice Department's Tax Division. "Through the Tax Defier Initiative, the Tax Division is committed to using both civil tools, such as the preliminary injunction entered against PQI in May, and also criminal tools, such as this indictment, against organizations like PQI that market and promote fraudulent tax evasion packages."

If convicted, defendants face the following maximum penalties: conspiracy -- 5 years imprisonment and up to a $250,000 fine; conspiracy to commit money laundering -- 20 years imprisonment and up to a $250,000 fine; mail fraud -- 20 years imprisonment and up to a $250,000 fine per count; and willful intent to evade or defeat tax -- 5 years imprisonment, up to a $250,000 fine, plus costs of prosecution. Included in the grand jury indictment is forfeiture of more than $50 million and three Northwest Florida residences.

This case is being prosecuted by Assistant United States Attorneys Michelle Heldmyer and Tiffany Eggers of the Northern District of Florida, Pensacola Division. This case was investigated by the IRS Criminal Investigation offices located in Pensacola, Florida, Rochester, New York, Dallas, Texas, and San Diego, California.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in United States District Court.

[AFTP]

50 years in prison with $1,000,000 fine wont happen.
Place your bets.