6 accused of tax fraud

A federal grand jury has indicted six men, including three Utahns, on allegations they promoted and executed a tax fraud scheme that hid more than $60 million in offshore bank accounts and cost the federal government more than $20 million in taxes.

The indictment, filed Tuesday in U.S. District Court for Utah, named Dennis B. Evanson, an attorney from Sandy; Brent H. Metcalf, an accountant from Cottonwood; and Stephen F. Petersen, an accountant from Coalville; along with men from Colorado, Washington and California. The 61-page document includes charges of conspiracy to defraud the government and conspiracy to commit mail and wire fraud against all six men, and tax evasion and aiding and assisting the filing of false tax returns against five of them.

Assistant U.S. Attorney Loren Washburn said the scheme took place from 1994 through this year and involved creating false tax deductions. The deductions were filed on tax returns — those of the men who were indicted and about 75 of their clients — to offset taxable income.

"The point of the scheme was to create false deductions of various types, depending on what worked best given the clients' particular situation," Washburn said.

Attempts by the Deseret Morning News to contact the three Utah men were unsuccessful.

According to the indictment, the methods used included creating documentation for bogus currency transaction losses, false insurance expense deductions and fake capital losses.

To carry out the scheme, the indictment alleges the men utilized offshore companies and bank accounts, the services of offshore nominees and opinion letters that purported to give legal authority to the fraudulent transactions.

"The various methods used and promoted by the defendants to carry out the scheme shared certain common characteristics," the indictment states. "Each method used fictitious transactions to move clients' untaxed income into offshore entities and returned those funds to the clients predominantly under the pretense of loans."

Those loans often were processed through a Utah company called Cottonwood Financial, Washburn said. Paperwork was created detailing the terms of the "loans," but clients understood they were not required to pay them back, she said, and the company never foreclosed on a loan. To the extent that payments were made on the loans, the indictment alleges that "these payments were usually made in furtherance of a further fraudulent tax deduction."