RSSThree county men named in $240 million tax fraud
Federal indictment states men allegedly misled, deceived IRS concerning tax shelter
Three businessmen have been indicted on charges of conspiracy to defraud the Internal Revenue Service of more than $240 million.
Two of the men attempted to defraud the IRS by making several "false and misleading statements" concerning a corporate tax shelter that was implemented by them, according to the indictment filed in federal court in Ohio on Oct. 22.
Daryl J. Haynor, a partner in KPMG's federal tax practice for the mid-Atlantic Area, based in Tysons Corner; and Jon Flask, a Vienna-based attorney, are both named in the indictment. KPMG was not named in the indictment.
"Mr. Haynor has been placed on administrative leave pending a review of the situation," said George Ledwith, a spokesman for KPMG, on Oct. 26.
One of Haynor's attorneys, Michael N. Levy, based in Washington, D.C., said that "the government has indicted an innocent man. Evidence at trial will amply demonstrate Mr. Haynor acted lawfully and with integrity."
Haynor's other attorney, Ralph William Kohnen, based in Cincinnati, Ohio, said Tuesday that he was not quite sure why the case is being tried in Ohio. "I suspect that one of the retail entities mentioned in the indictment is based here," he said.
A third man, Michael D. Parker, who was the chief operating officer of Reston-based investment company TransCapital, was also separately charged with conspiracy to defraud the IRS. Calls were placed to the attorneys for Flask and Parker, but were not returned by press time.
According to related court documents, Parker has agreed to plead guilty to his conspiracy count.
According to the federal indictment, Flask, Haynor and Parker implemented and marketed a complex corporate tax shelter named "Sale Leaseback of Tenant Improvements Strategy (SLOTS)," from 1998 through 2006.
The shelter enabled various U.S. corporations to claim tax deductions totaling more than $240 million on corporate income tax returns.
One federal indictment alleges that Flask, along with Haynor and Parker, misled and deceived the IRS by misrepresenting facts concerning the SLOTS tax shelter during IRS audits of companies claiming tax losses generated by the shelter in the years 2002 through 2004. In layman's terms, the trio allegedly created shell companies with dubious valuations, which then showed paper losses, and misled the IRS during a subsequent investigation.
If convicted, Haynor and Flask each face up to eight years in prison and a $500,000 fine. Parker faces up to five years in prison and a $250,000 fine.
According to a College of William & Mary business school Web site, Haynor "has more than 25 years at KPMG serving large corporate clients in several industries."