Covering Assets

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In today’s “Fraud of the Day,” a Las Vegas, Nevada man tried to guard against the legal ramifications of hiding more than $3 million dollars in assets from the Internal Revenue Service (IRS). Read on to find out how his tax fraud scheme and his hidden assets were exposed.

For nearly seven years, the Las Vegas man, a business partner, and a certified public accountant ran an asset protection business. (Let’s back up the bus for a moment to detail what an asset protection business does.) In short, business owners purchase asset-protection plans to prevent or minimize risk by protecting their business and personal assets from creditor claims. (In other words, if a lawsuit or claim arises, legal strategies can help prevent or deter the seizure of your assets.) Today’s fraudster sold asset protection programs for $9,800 to individuals who in turn sold asset protection services to clients who wanted to conceal their assets from potential litigants, creditors and government agencies.

Clients who purchased asset protection services from these scammers were able to deposit funds in bank accounts under a name that could not be traced back to the client. (These accounts were used to divert and hide income from the IRS.) The consultants, who sold these services, received a portion of the client fees. More than 70 clients using this system collectively had IRS liabilities totaling around $14 million. (With that amount of debt, it is understandable as to why they wanted to hide it in the first place. But, that doesn’t make it right.)

The Nevada fraudster used client funds to make personal credit card payments as well as car payments for a Mercedes-Benz and Lexus. (The clients would have been better off paying their taxes to the IRS. Either way, they had to part with their money.) In a separate, but related case, the fraudster, his wife and their attorney conspired to hide $1 million by conveying it to the attorney so that it would not be discovered by authorities. (Let’s just say that none of them were probably very good at playing “Hide and Seek” as a youngster.)

The 67-year-old man from Las Vegas was eventually exposed and sentenced to 22 months in prison for evading more than $3 million in taxes for his purported asset protection business and for trying to hide his assets in a separate case. The fraudster must also pay back $3,212,078 in restitution to the IRS for his tax fraud scheme.

What the deceptive Las Vegas businessman failed to recognize is that it’s harder to hide assets in today’s technological age. Forensic investigators have lots of options to choose from when tracing illegal transactions such as electronic bank statements, tax returns, property records, ATM or cash advances, email, accounting and budgeting software programs, mobile devices or social media.  It’s a good bet that a combination of these were used to uncover this fraudster’s assets. (This guy doesn’t have to worry about hiding anything anymore. He doesn’t have any assets left and where he’s headed, you can bet that there won’t be any room in his jail cell to hide anything.)

Today’s “Fraud of the Day” is based on an article entitled, “Las Vegas man sentenced to 22 months in prison for tax fraud,” posted on on November 16, 2018.  

LAS VEGAS (KSNV) — A Las Vegas man was sentenced Thursday to 22 months in prison for evading to pay more than $3 million in taxes for his purported asset protection business and fraudulently concealing assets in a separate case.

Richard C. Neiswonger, 67, previously pleaded guilty to one count of Conspiracy to Defraud the United States and two-counts of mail fraud. He also pleaded guilty to Conspiracy to Commit Wire Fraud.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.