Ex-IRS employee to serve 21 months for conspiracy

A former IRS employee has been sentenced to serve 21 months in federal prison, and a second man is expected to change his plea for their involvement in a conspiracy to defraud the IRS of more than $7 million over a nine-year period.

Max Lloyd appeared in U.S. District Court and was sentenced to 21 months in prison and ordered to pay the IRS $157,000 for his part in the scheme. Lloyd had entered into a plea agreement earlier.

Federal prosecutors said Lloyd joined others in marketing a fraudulent trust scheme to more than 300 clients between 1993 and 2002 that promised to reduce income tax liability.

An attorney for Lloyd portrayed her client as also a victim of the scheme, duped into thinking the trust scheme was legal. However, U.S. District Judge Ted Stewart noted that even when Lloyd discovered what he was doing was illegal, he continued to take part. Steward noted that Lloyd, a former IRS employee and certified public accountant, knew more than the average person how the tax system operated.

Accused co-conspirator Lanny White also appeared in court. An attorney for White indicated his client was prepared to change his plea on tax fraud charges. A hearing has been set for March 6.