There is a great deal of fear and uncertainty involving economic and political variables at play in America today, and scam promoters are having a field day with it.
Capitalizing on fears about currency stability, litigation, bank solvency, inflation, and a variety of other concerns of subjective value, scam promoters continue to operate with wide impunity. In the best cases they sell services or products of no value, in the worst they are costing people their life savings and making them party to criminal acts including systematic tax fraud.
Fraud schemes guised as real, legit investment opportunities may be especially attractive doctors who are suffering from decreased reimbursement rates and who are always sensitive to issues of asset protection and taxes. These are two things these scams specifically and repeatedly fail at protecting you from.
Among the many egregious examples I have personally witnessed lately are Ponzi schemes involving “insider” real-estate deals and non-existent deeds of trust, the Iraqi Dinar investment fiasco, and the use of trust structures based on manufactured versions of trust law complete with fraudulent historical context and, in the most sophisticated cases, even fake legal opinion letters and IRS private letter rulings.
I provide some specific due diligence issues to consider below along with the most blunt, strong warning possible: If you consider a financial/legal strategy that involves the use of a trust containing terms such as “pure trust,” “constitutional trust,” or “admiralty or common law trusts,” be exceptionally careful and seek counsel from an independent qualified tax attorney or CPA immediately. You may already need a lawyer.
The entirety of the large number of these fraud schemes that my associates and I have seen lack any factual basis or support in U.S. law and involve you making invalid sales and transfers to trusts controlled by unlicensed con artists.
In most cases these promoters of these abusive trust schemes are not licensed professionals like attorneys or CPAs although their websites and even the names of their companies (i.e. Smith, Jones, and Associates) are structured to make you think they are. They use terms like “trust preparer,” “trust master,” and even the innocuous “document preparer.”
Their arguments to win your business are typically centered on the same silly arguments specifically rejected by the IRS and the courts and go something along the lines of some or all of the following:
• There is no authority vested in the U.S. government to tax you;
• You can opt out of the system by transferring your assets to our magic tax free trust;
• You transfer title and control to me and I watch it for you;
• You pay me to do this every year, so you know you can trust me;
• The business you transferred is now owned by the trust and will no longer have to pay taxes;
• You work for the trust and also no longer have to pay taxes;
• Sometimes I’ll have you sell me the property for a very small amount of money; If you want I can even pay you in gold or silver so the money is untraceable;
• The Kennedys, Rothschilds, and similar families all have this kind of trust and this is what the “rich” do, it’s a secret we are not supposed to know or share;
• Your lawyer and CPA are party of the “system” that’s out to get you and they will deny all our “facts” and the “common law” and say we are wrong.
The end result? You sign your possessions and wealth over to “some guy” who in many case has unlimited discretion over its use and distribution and in the worst cases full legal title and the ability to sell it or steal it from you.
These kinds of con operators have no oversight, no attorney client privilege, no malpractice coverage, training or even a basic background check. More importantly, they have very little liability at all for giving bad legal advice that fails in a lawsuit, or bad tax advice that gets you in trouble with the IRS.
Here are some specific tips:
1. Deal only with licensed professionals like attorneys, CPAs, and investment advisors;
2. Ask for professional references;
3. Do your own web search on them;
4. When transferring investment funds make sure they are held by a “third party custodian” at a “securities broker dealer;”
5. Do not give or sell your property to any trust controlled by an individual stranger or promoter that does this for many people. There are great corporate and professional trustees out there who specialize in this.
And finally, don’t EVER enter a “trust” deal requiring a confidentiality agreement: They don’t want you telling guys like me the way the scam works.
Find out more about Ike Devji, JD and our other Practice Notes bloggers.
