An Endless Stream of Lies Read Online Free PDF Page B

the beneficiaries. Also referred to as a “revocable living trust”. This type of agreement provides flexibility and income to the living grantor; he or she is able to adjust the provisions of the trust and earn income, all the while knowing that the estate will be transferred upon death.” ( www.investopedia.com )
    “In 2002, Noel received a letter from an investor’s attorney detailing the invalidity of the trust and threatening suit against Noel and Certified Estate Planners, Inc. Specifically, the letter detailed that the customers were not properly advised about the consequences of the transfer of assets to the trust, nor was the trust an appropriate estate planning, income tax, or asset protection strategy. Noel showed the letter to an attorney” (46).
    “After receiving and reading the letter Noel had shown to him, the attorney warned Noel about the trusts he was promoting. The letter caused the attorney to question the validity of the trusts. As a result, the attorney conducted his own research on the validity of the trusts and was unable to find any legal or tax information to support these types of trusts. The attorney informed Noel of that finding in writing” (47).
    “From 2000 to 2002 Alex and Noel sold ‘irrevocable trust’ tax schemes” (18). “The sole purpose of these ‘trusts’ was to evade the customer’s tax obligations” (19). “In marketing the ‘trusts,’ Noel would target primarily wealthy elderly customers to join Certified Estate Planners, Inc. Advertisement was made through flyers, conferences, and via their website” (20).
    “These advertisements falsely claimed that the customers would be able to avoid their income taxes by placing their assets in trust while still continuing to ‘manag[e] everything’ but ‘own nothing’” (21). “Once a customer joined, Alex and Noel would create an individual ‘irrevocable trust’ for that customer. Each trust would obtain an Employer Identification Number (EIN) from the IRS. These ‘trusts’ typically listed Alex as a trustee and Noel as co-trustee” (22).
    “After the trust was established, customers would withdraw assets from their retirement accounts, IRAs, annuities and other deferred tax devices and deposit the funds into their ‘irrevocable trust.’ The customers then used these assets for personal expenses such as mortgage payments and home repairs” (23).
    “The early withdrawal of these funds and subsequent use for non-tax-exempt purposes should have resulted in the assets being subject to taxation and early withdrawal penalties. As a result, the income should have been reported on the customer’s individual federal income tax return. However, Alex and Noel’s scheme resulted in the customer not reporting this taxable income” (24).
    “As part of this scheme, Alex prepared customers’ Form 1040 Individual Federal Tax Return and Form 1041 Federal Tax returns for the customer’s ‘trust.’ Instead of reporting the withdrawn assets as personal income subject to taxation on the customer’s individual Form 1040, Alex improperly reported the customer’s withdrawn funds on the customer’s Form 1041 ‘trust’ tax return. Further, Alex would consistently under-report the total amount of this income on the Form” (25).
    “After reporting this taxable income on the wrong form, Alex would make fraudulent deductions on the customer’s Form 1041 return to fully deduct, or ‘zero out,’ the income reported. This would result in customers paying nominal, if any, taxes on this income. Alex improperly listed personal expenses (such as mortgage payments, utility bills, rent, and health insurance) as deductions on the customer’s Form 1041 trust return” (26). “Alex would further reduce the customer’s reported income by reporting large K-1 distribution fees, claiming that the customer’s ‘trust’ distributed the income to the customer. However, these large ‘distributions’ were not then reported on the