A Florida -based financial adviser pleaded guilty to his role in drafting tax shelters for clients (and fabricating tax returns to go along with him), demanding over $ 100 million in false discounts.
Stephen T. Mellinger, a beach -based advisor, insurance seller and securities broker, pleaded guilty to the Mississippi Federal Court on charges of fraud in internal income and wire fraud, as well as to prepare false tax statements. He faces five years in prison.
According to Finra data, Melinger is no longer registered. He was largely located in Indiana and Michigan before transferring to Florida in 2015 and worked in Baird and Northwestern mutual before joining Nylife Securities in 2009. According to BrokercheckHe spent six years there before he was fired in 2016 to overcome the “scope of approved business activities”.
The Department of Justice revealed in the court documents that in 2013, Melinger began marketing of “its royal shelter” for future customers, which created the “false submission” that customers can require federal business expense tax deductions (adapted as royalties for intellectual property use).
These so -called “royal payments” have been paid to shelters located Melinger. However, they almost immediately returned to customers in a different bank account they controlled. Melinger and its unnamed co-conspirators (including a family member) received fees for each transfer ranging from 1% to 15%. According to Doj, customers can always keep the money check they transferred.
A diagram of the scheme.
A diagram of the scheme.
Melinger and his co-conspirators will help clients prepare false tax return on federal income by directing customers to deduct fake business expenses and report them as “honoraries”.
Melinger and his crew helped customers fake over $ 106 million, leaving IRS with a $ 37 million tax loss. During the scheme, Melinger and his co-conspirator with no pocket name about $ 3 million fees.
By 2016, investigators were closing, and Melinger learned that some of his Mississippi customers were being investigated, with IRS capturing some customers' funds.
According to court documents, Melinger and his relative “benefited from subsequent confusion” by transferring some of his tax housing customers' funds for their use. Doj revealed that he stole over $ 2.1 million, using some money to buy a home in Delray Beach.
Melinger is planned to be sentenced on September 16th.