A federal grand jury in Gulfport, Mississippi, has indicted a Florida financial advisor for promoting an illegal tax shelter, stealing clients' funds, and money laundering. The indictment, unsealed yesterday, accuses Stephen T. Mellinger III of orchestrating a scheme that began in late 2013.
Mellinger, a securities broker and insurance salesman, allegedly conspired with others to defraud the IRS by promoting an illegal tax shelter. According to the indictment, he instructed clients to transfer money to a company controlled by him or his co-conspirators. This amount was then claimed as a deduction on their tax returns. The conspirators would return the money to a bank account controlled by the clients minus a fee for their services. Despite receiving their money back, clients were directed to claim the transfer as a "royalty" payment on their tax returns. Mellinger allegedly earned over $3 million in fees from this scheme.
In January 2016, the federal government seized funds from some of Mellinger's clients involved in defrauding health care benefit programs like TRICARE. Mellinger allegedly conspired with a relative to steal some of these funds through the tax shelter and laundered them, knowing they were proceeds of healthcare fraud. He is accused of using part of these stolen funds to purchase a home in Delray Beach, Florida.
Mellinger faces multiple charges: conspiracy to defraud the United States, aiding in preparing false tax returns, conspiracy to commit wire fraud, conspiracy to commit money laundering, and substantive counts of money laundering. If convicted, he could face up to five years in prison for conspiring to defraud the IRS and up to 20 years for each count related to wire fraud and money laundering.
Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Todd W. Gee for the Southern District of Mississippi announced the charges.
The investigation is being conducted by IRS Criminal Investigation and Defense Criminal Investigative Service. The case is being prosecuted by Trial Attorneys William Montague, Richard J. Hagerman and Matthew Hicks of the Tax Division; Assistant U.S. Attorney Charles W. Kirkham for the Southern District of Mississippi; and Trial Attorneys Emily Cohen and Jasmin Salehi Fashami from MLARS.
An indictment is merely an allegation; all defendants are presumed innocent until proven guilty beyond a reasonable doubt in court.
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