An Everett man was sentenced to three years in federal prison Thursday for participating in a scheme to bilk the U.S. government out of $8.5 million, the U.S. Attorney’s office said.
Michael Joseph Shanahan, 59, is one of two men who earned $2 million selling 400 trust packages by falsely telling customers they could avoid paying income taxes under the tax scheme.
He also failed to file an income tax return for 1999.
U.S. District Judge Ronald B. Leighton of Tacoma found that the tax loss to the government was more than $8.5 million. He ordered Shanahan to pay $8,560,199 in restitution to the IRS.
Shanahan pleaded guilty in February to conspiracy and not filing a tax return. Following a two-week trial, a jury convicted Shanahan’s associate, David Carroll Stephenson, of conspiracy and three counts of not filing tax returns.
In May, Stephenson was sentenced to eight years in prison and ordered to pay $8.5 million in restitution.
Between 1994 and 2000, Shanahan and Stephenson assisted people in forming and operating “pure equity trusts,” according to court records.
Shanahan falsely advised customers that they could avoid paying income taxes if they placed their income and assets into the trusts even though they continued to control the money.
Reporter Jim Haley: 425-339-3447 or haley@heraldnet.com.
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