By David Kravets -
SAN FRANCISCO -- A self-professed guru of offshore tax havens was sentenced to six months in prison Monday for conspiring to defraud the Internal Revenue Service after prosecutors urged a light term in exchange for his cooperation in the case.
Jerome Schneider, whose book titles include "Hiding your Money" and "How to Own Your Own Private International Bank," made millions helping the wealthy set up offshore banks to conceal money from being taxed.
He faced a maximum five-year term, but the government urged the judge to imprison him for no more than six months because of his cooperation. He is assisting authorities catch his clients and others, and has made himself widely available to the media to tell viewers and readers that offshore tax havens are illegal.
"He's been very helpful," prosecutor Jay Weill said outside court.
Inside the courtroom, Schneider, 53 of Vancouver, British Columbia, begged the judge for no prison time.
"I've lost everything," he said, noting that his February guilty plea to one count of conspiracy has cost him his marriage, and he is now broke. He added that he is helping the government "plug the loopholes and get tax cheats."
U.S. District Judge Susan Illston acknowledged that Schneider has told several media outlets that offshore tax shelters are illegal, but said prison time was required to deter other potential tax evaders.
For years, Schneider persuaded wealthy investors to pay him tens of thousands of dollars each to create banks in venues such as Nauru, the Cayman Islands, Grenada, the Cook Islands and Vanuatu. He told his clients they could lawfully hide money in those banks, a practice the IRS says is illegal.
It's not known how much money was transferred offshore through Schneider's investment schemes.
When agents raided his Vancouver offices in 2001, they took hundreds of files from his clients, who are named in court documents. They include physicians, dentists, entrepreneurs, computer technicians and retirees from across the country.
Some of those clients contacted by The Associated Press refused to comment. Others did not return phone calls.
"His conviction and subsequent published messages to his former clients should be a clear sign that it is time for tax evaders to get their tax matters in order with the IRS," said Roger Wirth, an IRS special agent.
A college dropout from Los Angeles, Schneider widely promoted his services. He held seminars around the world and took out advertisements in The Wall Street Journal and in-flight airline magazines.
In letters to potential clients, he said his financial strategy "allows you to wield tremendous power, prestige and influence. With it, doors will open. People will bow."
Some of those clients are now under IRS investigation.
Authorities began investigating his scheme after he invited a former U.S. Senate investigator, a specialist in international financial crimes, to speak at one of his conferences. The investigator alerted authorities.
Source: Seattle Post Intelligencer
