Man Enjoined in $31 Million Offshore Tax-fraud Scheme

A federal court has shut down a Las Vegas promoter of an offshore trust tax scheme. According to papers filed in the case, Reinhold Sommerstedt, a Las Vegas-based promoter, created phony domestic and foreign trusts to move customers’ assets from the United States to offshore banks located in the West Indies. Customers allegedly used phony loans and gifts to repatriate their money while concealing it from the Internal Revenue Service (IRS). Customers paid as much as $14,500 to participate in the scheme.

In issuing an injunction against Sommerstedt, the court found that he failed to present “any evidence to refute the government’s indication that Sommerstedt’s trust scheme was organized and operated solely for the purpose of improperly reducing his customers’ federal tax liabilities.” The injunction bars Sommerstedt from promoting the trust scheme or any similar scheme. He must also give the government a list of his customers’ names, addresses, e-mail addresses, telephone numbers and Social Security numbers.

The offshore tax scheme is alleged to involve more than 180 customers and to have cost the U.S. Treasury more than $31 million in lost tax revenue.

The other three defendants in the case previously consented to permanent injunctions. They are:

Daniel Young of Las Vegas, who allegedly created phony domestic and foreign trusts to move customers’ assets from the United States to offshore banks located in the West Indies;

Lynn Lakers of Boulder City, Nev., a tax-return preparer who allegedly prepared false tax returns for the phony trusts used in the scheme; and

Stephen Nestor of Boise, Idaho, a former IRS revenue officer who allegedly signed false tax returns on behalf of customers’ bogus trusts.

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