Federal Judge Sentences Three For Tax Fraud
A Wyoming couple and an Arizona woman were sentenced in federal court last week following their convictions for conspiracy to defraud the United States by promoting and using a sham trust scheme to conceal taxable income, according to a news release from Wyoming U.S. Attorney Christopher Crofts.
Two of the defendants also were sentenced for obstructing a grand jury investigation.
On Aug. 18, Chief U.S. District Judge Nancy D. Freudenthal of the District of Wyoming sentenced Joe Ruben Hill of Cheyenne to serve three year, five months imprisonment to be followed by three years of supervised probation.
Freudenthal also sentenced Lucille Kathleen Hill of Cheyenne to serve three years of probation with special conditions, including six months of home confinement.
The Hills were each ordered to pay a $100 special assessment and restitution for unpaid taxes.
On Friday, Freudenthal sentenced Gloria Reeder to serve one year, three months imprisonment to be followed by three years of supervised probation. The judge also ordered her to pay a $100 special assessment and $310,428 in restitution for unpaid taxes.
On May 28, a jury convicted Joe Hill, Kathy Hill and Gloria Reeder after a three-week trial. Prosecutors presented evidence that showed the Hills last filed federal individual income tax returns in 1994. Reeder had not filed her taxes since 1985. None of the defendants had paid any income taxes from those years to the present.
The Hills operated a business called the Creative Consulting Group (CCG), which sold sham trusts that they falsely claimed would reduce or eliminate an individual’s federal income tax liability. The scheme involved fraudulently assigning income to the trust by using a bank account in the trust’s name that was opened with a false federal tax identification number.
The Hills, Reeder and many CCG clients who testified during the trial used the CCG trusts to conceal income and assets from the Internal Revenue Service. Kathy Hill and Reeder had IRS income tax assessments in the 1990s they never paid. To prevent the IRS from seizing their homes, they both used false liens to conceal the properties’ equity.
From 2007 through 2012, the Hills earned almost $500,000 by selling the CCG trusts, while Reeder earned more than $400,000 in income from insurance commissions and a travel business.
Three trial witnesses who used the CCG trusts –Lawrence Paille, Amanda Campbell and Stephanie Maciel – previously pleaded guilty to conspiracy to defraud the United States. The unreported income related to the scheme exceeded $2.7 million.
The case was investigated by special agents from the Cheyenne and Denver offices of IRS Criminal Investigations and was prosecuted by Wyoming Assistant U.S. Attorneys Todd Shugart and Eric Heimann and trial attorney Lori Hendrickson of the Tax Division.