Wednesday, June 30, 2004

'No taxes' plan ends in prison

Couple set up bogus trusts

By Dan Horn
Enquirer staff writer

A Lebanon couple with ties to a tax protest group is headed to prison on charges of defrauding the government.

Federal prosecutors say Phillip and Joanne Caldwell failed to pay more than $200,000 in taxes from 1993 to 2001 and tried to hide their income through bogus charitable trusts.

Both are accused of working with the Freedom Connection, a tax protest group in Greater Cincinnati that offered advice on how to avoid paying the Internal Revenue Service.

Phillip Caldwell, 48, was sentenced to two years in prison while his wife, Joanne, 41, was sentenced to one year.

U.S. District Judge S. Arthur Spiegel also ordered each to pay more than $100,000 in restitution.

The Caldwells' attorney, Howard Richshafer, said his clients accept responsibility for their actions but had hoped for shorter sentences. He said Phillip Caldwell did not realize he and his wife were breaking the law when he followed the advice of the Freedom Connection and set up the trusts.

"He believed he could do this legitimately," Richshafer said. "Mr. Caldwell attended seminars on trusts and how to avoid paying income taxes. Unfortunately, the promoters of these seminars were not in sync with what the law requires."

Federal prosecutors say the couple hid income in the trusts, used cash to conceal income and attempted to revoke their social security numbers and taxpayer status.

At one point, prosecutors say, Joanne Caldwell claimed she was a foreign citizen and a non-resident alien, even though she lived in Ohio.

IRS officials say tax-protest schemes remain a problem despite dozens of successful prosecutions. Several Greater Cincinnati residents, including some associated with the Freedom Connection, have been convicted in recent years.

"They're still around," said IRS spokesman Craig Casserly. "But we've had a fairly good success rate."


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