Sunday, October 21, 2018
News Roundup

Tampa tax shelter schemer too fat for his prison term, attorney says

TAMPA — A federal judge sentenced two Bay area men to prison terms last week for peddling an offshore tax shelter scheme that cost the IRS an estimated $10 million.

But on Monday, one of the men’s attorneys protested the outcome, indelicately filing a motion that suggests his client is too fat for prison.

Stephen Donaldson Sr., 72, doesn’t have an average man’s life expectancy because he is 5-foot-9 and weighs 273 pounds, attorney Curtis Fallgatter wrote, and therefore it isn’t right to make him serve six years and four months, a term that could translate to 61 percent of Donaldson’s remaining time on earth.

Conspirator Duane Crithfield, 70, was sentenced to four years and six months. His weight was not brought up.

The obesity defense was the latest turn in a case that has taken more than four years to prosecute.

Crithfield and Donaldson were accused of marketing a fraudulent offshore tax strategy known as a "Business Protection Plan" to medical practices, offering doctors and others coverage against unlikely events such as a kidnapping.

Purchasers would pay a premium and claim the cost as a business expense but would later reclaim about 85 percent of the premium if misfortune did not come their way. That spared them paying a much higher marginal tax rate on the earnings.

A separate hearing will be held at a later date to determine restitution.

Both men have asked to remain free while they appeal. Neither has been booked yet or posed for a mug shot at the Pinellas County Jail, which often holds federal detainees.

Chief U.S. District Judge Stephen D. Merryday presided over their nonjury trial in June 2016 and filed his 36-page decision in July 2017, using it to poke at America’s complicated tax code, which he called "a bloated and opaque monstrosity."

BACK STORY: In deciding fraud case, Tampa judge blasts tax code as ‘bloated and opaque monstrosity’

Early last year, he threw out the men’s signed, adjudicated plea deals — against their wishes — after defense attorneys began downplaying their clients’ criminal conduct and the resulting loss to the IRS. That led the judge to conclude there was no meeting of the minds.

Had the plea deal remained intact, Crithfield and Donaldson would have faced no more than three years each in prison — that, for a single count of helping a Sarasota anesthesiologist make a false statement on his corporate tax return.

The case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorneys Jay G. Trezevant and Megan K. Kistler.

Contact Patty Ryan at [email protected]

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