Since 2001 the Department of Justice’s Tax Division has enjoined more than 245 tax preparers and promoters of tax fraud schemes. The Government is becoming increasingly aware and sensitive to the extent of systematic fraud caused by tax preparers facilitating offshore schemes. One of the latest reported cases on this issue involved 4 individuals and 2 businesses, Bright Enterprises Inc. and Hawaii Financial Specialists, Inc., who promoted a scheme that created false tax deductions. According to the Department of Justice, customers using the scheme would transfer money offshore as either tax deductible insurance premiums or IRA investments and then got the funds back, concealing that fact that the customers were merely recovering their own funds. The methods and means included sham loans, foreign credit cards and programs involving “scholarships” which purportedly were used to pay customers’ expenses for their children’s tuition. Customers would receive 80% of their transferred funds back in this fashion. The estimated losses to the U.S. Treasury as the result of this scheme exceeded $2 million.

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