Arizona

Arizona man pleads guilty for defrauding IRS of $17 million through ‘tax shelters’

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An Arizona man pleaded guilty Friday to defrauding the Internal Revenue Service of $17 million between 2017 and 2023.

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The U.S. Department of Justice announced on Monday that Kent Ellsworth pleaded guilty to two counts of assisting in the preparation of false tax returns, which were used to provide an illegal tax shelter for his clients.

Ellsworth Stauffer, the operator of a formerly licensed professional corporation, concealed nearly $60 million from the IRS, causing an estimated loss of $17 million in taxes that Ellsworth’s clients should have paid, according to the DOJ in a news release.

According to the DOJ, Ellsworth promoted and sold fraudulent tax shelters for about 60 clients nationwide, creating more than 500 false tax returns.

Ellsworth carried out his scheme by reporting his clients’ income to fraudulent trusts and foundations set up to act as bank accounts that held the funds free of being taxed.

The DOJ said that the majority of Ellsworth’s clients were successful business owners who falsely donated the funds to the tax shelters under the disguise that the income was being given to client’s family members, allowing for the bypass of regular tax laws.

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The DOJ added that Ellsworth also charged money by charging for preparing the returns.

The DOJ stated that Ellsworth had been taught how to perform the fraudulent returns but did not specify who taught him.

Ellsworth was scheduled to be sentenced on Aug. 14 by a federal court and, if convicted, could face a six-year prison sentence, a fine of $250,00, reimbursement of prosecution expenses, and undergo supervised release.

The DOJ did not immediately provide more information on Ellsworth and his crimes.



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