Two Sentenced in Tax Scheme

posted by Alan McBride -

Tampa federal judge Steven D. Merryday sentenced two men for their roles in a conspiracy to dodge the tax man by using an offshore tax shelter scheme.

The sentencing took place Friday, court records show.

According to court documents, Duane Crithfield of Lecanto was sentenced to four years and six months in federal prison and Stephen P. Donaldson, Sr. of Tampa got sentenced to six years.

Reports reveal that Crithfield and Donaldson were indicted on May 2, 2013, for conspiracy to defraud the United States. 

A superseding indictment was returned on July 25, 2013, that added two substantive charges.

As alleged in the superseding indictment, from 2001 to at least March 2008, Crithfield and Donaldson, and others, through Foster & Dunhill, Offshore Trust Service, Fidelity Insurance Company, and Citadel Insurance Company promoted, marketed, and implemented a fraudulent offshore tax strategy known as the Business Protection Plan, or BPP. 

Investigators say the fraudulent BPP strategy enabled the defendants' wealthy clients to claim business expense deductions based on sham "BPP insurance premium" payments made to the offshore entities Fidelity Insurance Company and Citadel Insurance Company in amounts intended primarily to substantially reduce the clients' taxable income for a particular year.

According to court records and evidence admitted during the bench trial, Crithfield and Donaldson conspired together, and with others, to create and promote the offshore BPP tax shelter strategy. 

The strategy, however, was nothing more than self-insurance and was devoid of any economic substance and the so‑called "BPP insurance premiums" were not based on any business risks.

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