Offshore tax haven seller is indicted
Don Bauder
December 26, 2002
Jerome Schneider, a peddler of offshore tax dodges who is well-known in San Diego, has been indicted on multiple criminal counts.
In 1981, Schneider – by then a felon for stealing phone equipment – sold an offshore brass-plate "bank" to J. David "Jerry" Dominelli, who later went to prison for one of San Diego's most-publicized Ponzi schemes.
Dominelli, who was released from prison in the mid-1990s, owned 299,999 shares in the so-called bank on the Caribbean tax haven of Montserrat. His then-associate, now named Nancy Hunter, owned one share. She also went to prison, for a much briefer period, for her role in the J. David caper.
Last year, Internal Revenue Service investigators seized Schneider's records from his Manhattan Beach headquarters. He is now operating out of Vancouver, British Columbia.
At that time, the IRS was looking into Schneider's selection of the exotic locale of Nauru, north of the Solomon Islands, as his favorite tax haven.
This month, the U.S. Attorney's Office in San Francisco – which is doing a fantastic job going after white-collar crime – announced the indictment of Schneider and his attorney, Eric J. Witmeyer of Los Angeles.
They were indicted on one count each of conspiracy to defraud the IRS, 14 counts each of wire fraud, and eight each of mail fraud.
Here's how the Nauru caper worked, according to the indictment: U.S. taxpayers would pay Schneider and Witmeyer $15,000 to $60,000 to purchase a Nauru entity.
Then the defendants would use a scheme called "decontrol" to conceal the taxpayer's ownership in the entity. Schneider and Witmeyer allegedly sold the taxpayer's interest to a so-called "Independent Foreign Owner" in exchange for a promissory note.
The taxpayers were told they could receive back the funds they had transferred to the offshore entity through tax-free loans.
But when the pair tried to peddle the deal to undercover IRS agents posing as prospective clients, the end was near.
Schneider billed himself as an international financial expert and was author of "Hiding Your Money."
Rob Lambert of New York's Asset Protection Corp. calls Schneider the "No. 1 scammer." However, whatever happens to Schneider and Witmeyer, clones will replace them, Lambert says.
"Tax scamming is a major industry," Lambert says. He reminds people that U.S. citizens and residents are taxed on worldwide income, and even the best-laid evasion plans can be detected.
No one should go offshore without involvement of his or her personal attorney and accountant, he says. (I believe no one should go offshore, period.) Lambert says that if offshore planners tout secrecy, you should run away.
Newport Beach-based fraud expert Jay Adkisson, who has a Web site, www.quatloos.com, says Schneider penned "some of the worst books on offshore and asset protection planning."
Schneider uses magazine and SkyMall ads, passes out professional-looking brochures, holds "Offshore Wealth" summits and promiscuously passes out fliers, including a flier featuring his biography.
Schneider also promotes himself through his book, "Global Investing for Maximum Profit and Safety."
Adkisson offers this advice: So-called offshore tax planners are a trap – a good way that you can end up behind bars.
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Union-Tribune library researcher Cecilia Iniguez assisted with this column.
Don Bauder: (619) 293-1523; don.bauder@uniontrib.com |
