04/19/2010

News / New Hampshire Tax Shelter Promoter Sentenced for Conspiring to Defraud the United States

Anthony G. Merlo, a resident of Portsmouth, N.H., was sentenced to 51 months of imprisonment for conspiring to defraud the United States, the Justice Department and the Internal Revenue Service (IRS) announced today.

On May 22, 2009, Merlo pleaded guilty to one count of conspiring to defraud the United States before the Judge Janet T. Neff of the U.S. District Court for the Western District of Michigan. Merlo admitted that in 1995 he became involved with promoting offshore tax shelters with his co-defendants Peter Peggs and Robert Larsen through an insurance company in the U.S. Virgin Islands known originally as Caduceus Life Insurance Company and later known as Security Trust Insurance Company. Merlo admitted that in 1999, he joined a conspiracy with Peggs and Larsen, as well as co-defendants John A. Campbell and Craig Stone, to conceal information and documents from the IRS in connection with the marketing of Security Trust’s tax shelter products.

The tax shelters included purported insurance policies sold to U.S. taxpayer clients as a tax deductible product, with the understanding that the purchasers would have most of their premiums returned to them in a non-taxable manner. The clients would improperly take tax deductions for the purchase of this sham product, and improperly and fictitiously reduce their income taxes.

On Nov. 2, 2009, one of Merlo’s conspirators, John A. Campbell, was sentenced to 60 months in prison.

Acting Assistant Attorney General John DiCicco and Donald A. Davis, U.S. Attorney for the Western District of Michigan, commended the investigative efforts of the IRS agents involved in this case, as well as Tax Division trial attorneys Richard M. Rolwing, Patrick J. Murray, and Jessica Nuzzelillo, who prosecuted the case.

http://www.justice.gov/opa/pr/2010/April/10-tax-441.html

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