U.S. Attorney’s Office Drops Federal Criminal Investigation Targeting Tax Consulting Company and Founders for Mail Fraud, Wire Fraud, Money Laundering and Conspiracy
Our clients, a tax consulting company and its founders were targeted in a federal investigation and faced mail fraud, wire fraud, money laundering and conspiracy charges related to the sophisticated and hyper-aggressive tax minimization strategies that the company implemented on behalf of large companies throughout the United States.
Shortly after being hired, we made contact with the Assistant U.S. Attorney spearheading the investigation and scheduled a meeting to discuss the status of the government’s investigation and its intentions with regard to the case. During the meeting, the Assistant U.S. Attorney (AUSA) was very collegial and spent a great deal of time with us.
The AUSA advised us as to when the investigation began, what caused the investigation to be started, which acts our clients committed that the government considered to be criminal and the government’s timeline moving forward. He further advised us that he would hold off on bringing criminal charges until we had the opportunity to get up to speed in the matter, that he was looking forward to speaking further with us and that he was interested in our opinion as to whether our client’s tax minimization strategies and actions constituted criminal conduct. It is always a plus to deal with prosecutors and agents who keep an open mind and are genuinely interested in hearing our side of the story, so we were very encouraged following our initial meeting with the AUSA.
We hired consulting experts under the umbrella of the attorney-client privilege and carefully reviewed the substance of the tax strategies that our clients had created. We took the time to understand the positions of the companies that purchased these tax strategies from our clients and what each strategy was intended to accomplish. At the conclusion of our work, our experts concluded that each strategy implemented by our clients, although complex and aggressive, was consistent with a reasonable interpretation of current tax law and authority. Armed with these expert opinions, we created a presentation to be delivered to the AUSA.
We scheduled another meeting with the AUSA and made a presentation summarizing the substance of each of the strategies created and implemented by our clients, outlining the opinions of our experts that the strategies were legal and generally making our case that a criminal prosecution was inappropriate. At the conclusion of our presentation, we left behind a copy of our PowerPoint and three binders of exhibits. We had a number of follow up conversations with the AUSA and we took advantage of every opportunity to urge that there was no criminal conduct and that the government should not prosecute.
The government closed its investigation and did not file criminal charges against our clients.