Federal Court Enjoins Las Vegas Man Whose Tax-Fraud Scheme is Estimated to Have Cost...

Federal Court Enjoins Las Vegas Man Whose Tax-Fraud Scheme is Estimated to
Have Cost Treasury $31 Million

Sham Trust Scheme Helped More Than 180 Customers Fraudulently Conceal Income

WASHINGTON, June 24 /PRNewswire-USNewswire/ -- A federal court has permanently
enjoined Reinhold Sommerstedt, a Las Vegas-based promoter of a sham trust tax
scam, the Justice Department announced today. According to papers filed in the
case, Sommerstedt created phony domestic and foreign trusts to move customers'
assets from the United States to offshore banks located in the West Indies.
Customers allegedly used phony loans and gifts to repatriate their money while
concealing it from the Internal Revenue Service (IRS). Customers paid as much
as $14,500 to participate in the scheme.

In granting the injunction, Judge Brian E. Sandoval of the U.S. District Court
for the District of Nevada said that Sommerstedt failed to present "any
evidence to refute the government's indication that Sommerstedt's trust scheme
was organized and operated solely for the purpose of improperly reducing his
customers' federal tax liabilities." The injunction bars Sommerstedt from
promoting the trust scheme or any similar scheme. He must also give the
government a list of his customers' names, addresses, e-mail addresses,
telephone numbers and Social Security numbers.

The court found that Sommerstedt's actions were "not an isolated act of
misconduct" and that the scheme "involved more than 180 customers." The
government complaint in the case alleged that the scheme cost the U.S.
Treasury more than $31 million in lost tax revenue. The court said that it was
"not persuaded by Sommerstedt's self-serving statement that an injunction is
unnecessary because he will voluntarily refrain from future fraudulent
conduct," noting that Sommerstedt has "never acknowledged the wrongfulness of
his actions."

The other three defendants in the case previously consented to permanent
injunctions. They are Daniel Young of Las Vegas, who allegedly created phony
domestic and foreign trusts to move customers' assets from the United States
to offshore banks located in the West Indies; Lynn Lakers of Boulder City,
Nev., a tax-return preparer who allegedly prepared false tax returns for the
phony trusts used in the scheme; and Stephen Nestor of Boise, Idaho, a former
IRS revenue officer who allegedly signed false tax returns on behalf of
customers' bogus trusts.

Offshore transactions and trust misuse are two of the IRS's Dirty Dozen tax
scams for 2009.

John DiCicco, Acting Assistant Attorney General for the Justice Department's
Tax Division, thanked Robert Metcalfe, the Justice Department trial attorney
who handled the case.

In this decade the Justice Department has obtained injunctions against more
than 410 tax-fraud promoters and tax-return preparers. More information about
these efforts can be found on the Justice Department Web site.

SOURCE U.S. Department of Justice

U.S. Department of Justice Office of Public Affairs, +1-202-514-2007, TDD:
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