Carefree couple indicted for tax evasion and false statements

Defendants falsely stated to the IRS they were impoverished and would be homeless if not for the kindness and support of their children

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CAREFREE – On June 8, 2009, a federal grand jury issued an eight-count felony indictment against James R. Parker, 61, for tax evasion and making false statements and two counts of making false statements against his wife Jacqueline Parker, 57.

During the period of time relevant to the indictment, Parker owned Omega Construction, Inc., a Nevada Corporation, and was owner and CEO of MacKinnon Belize Land and Development Limited, a land development corporation on the Placencia Peninsula in Belize.

After filing joint income tax returns for 1997 and 1998, reporting income of less than $8,000 and minimal tax liabilities, those returns became the subject of an extensive IRS audit, which revealed the Parkers failed to report substantial income from business activities in Belize and elsewhere.

In May 2003, the Parkers, represented by legal counsel, entered into an agreement with the IRS in U.S. Tax Court stipulating their correct individual income tax liability for 1997 and 1998 was $1,035,479 and $207,095 in penalties. Approximately $465,860 in interest was also assessed against the Parkers.

Although they agreed to pay the government over $1.7 million in taxes, penalties and interest for 1997 and 1998, the Parkers never paid any amount toward that obligation.

When the Parkers failed to file tax returns for the years 1999 and 2000, another IRS audit resulted in an assessed liability in excess of $1 million, which the defendants have also failed to pay.

And, even though the Parkers filed tax returns for 2001 and 2002, indicating tax liabilities of $13,924 and $12,331, respectively, they failed to pay the taxes for those years as well.

According to the government, as early as 2002, in anticipation of being assessed a substantial tax liability by the IRS for tax years 1997 and 1998, Parker began hiding the couple’s assets and sources of income to evade payment.

In August of that year, Parker transferred ownership of the couple’s $1.5 million Carefree residence from a trust to Sunlight Financial LLP, a nominee entity said to be managed by the defendants’ daughter Rachael T. Parker Harris.

However, as the indictment also states, the Parkers maintained sole use and control over the Carefree luxury home both before and after the transfer to Sunlight, which has never filed an income tax return.

Then, between 2004 and 2007, Parker invested over $1.2 million in a cattle operation in Oklahoma, using Cimarron River Ranch, LLC as the nominee entitee to own and operate the cattle ranch.

In order to hide his true ownership, Parker made his then 21-year-old son Samuel Parker the straw owner of Cimarron, which also has also never filed an income tax return.

In June 2004, using Cimarron as the owner and his son as a “straw buyer,” Parker purchased a $306,695 Rolls Royce automobile, which was delivered to the Parkers’ Carefree residence with the insurance policy listing James Parker as the primary driver.

Parker also took out a $1.5 million mortgage on the Carefree residence in August 2005 and used approximately $1 million of the proceeds to purchase a 7,000 square foot home in Amarillo, Texas.

He then placed the Texas home into the name of another nominee entity, RSJ Investments, LLC, which has also never filed a tax return, and made his son Samuel the owner/member.
In June 2004, as CEO of MacKinnon Belize Land and Development Limited, Parker agreed to sell 597 acres in Belize for $6 million. At Parker’s direction, the buyer deposited the sales proceeds into an account at Belize Bank, Limited.
Between June 2004 and January 2008, Parker facilitated $3,411,904 in transfers, wiring $1,302,000 to First State Bank in Boise City, Okla. and $1,544,375 to First National Bank of Tribune in Elkhart, Kan. for Cimarron; $306,000 to Desert European Motors for the purchase of the Rolls Royce; and $36,029 to Fenton Motors of Duma for the purchase of a Ford truck.
Parker also wired $233,500 to a Chase Bank account in the name of Resorts Consulting Quorum LLP (RCQ), the only authorized signor of which was an individual associated with a Phoenix law firm that was representing the defendants in matters before the IRS.

A total of $112,000 in monthly installments of $7,000, was paid to Omega Construction from the RCQ account with approximately $152,000 from the same account making the mortgage payments on the Carefree home.

Other than nominal amounts flowing through the RCQ account to Omega, none of the $3,411,904 in funds repatriated from the sale of the Belize land was reported on the Parkers’ tax returns.

An individual who owes money to the IRS could seek a reduction of his outstanding obligation by filing an Offer in Compromise (Form 656).

Having insufficient assets and income to pay the full amount due is considered one of the acceptable reasons for seeking such a compromise. Form 656, along with other forms and schedules, signed under penalty of perjury, must be submitted to detail the taxpayer’s financial information.

Generally, when the IRS agrees to a substantially reduced tax liability, it is done with the understanding a single payment will be made by the taxpayer and only under limited circumstances does the IRS allow taxpayers to enter into installment agreements to satisfy a compromise.

 In June 2004, the Parkers filed an Offer in Compromise, attempting to eliminate their unpaid 1997, 1998, 2001, 2002 and 2003 tax obligations, totaling approximately $1.7 million, with a one-time payment of $130,000.

According to the indictment, in doing so, Parker falsely submitted and signed, under penalty of perjury, documents reflecting the defendants had neither the income nor the assets to pay the tax liabilities owed.

The documents also falsely claimed the proposed $130,000 offered would be borrowed from friends and the bank.

The offer was declined by the IRS.

According to the indictment, Parker submitted at least two more compromise offers between 2004 and 2005, seeking to eliminate $1.7 million in tax obligations through a one-time payment ranging from $130,000 to $450,000.

In August 2005, after the IRS refused to accept any of their compromise offers, the Parkers are said to have submitted another set of false financial statements, while offering to make $2,000 monthly installment payments against their $1.7 million tax liability
That offer was also rejected.

The Parkers are accused of failing to disclose ownership in their Carefree home worth over $1 million, a $300,000 Rolls Royce, a $1 million cattle operation, and approximately $6 million in proceeds from the sale of land in Belize.

The charging document notes, while the Parkers filed documents with the IRS claiming net worth ranging from only $14,135 to $22,500 during 2004 and 2005, Parker and his wife made 18 and 11 trips to Belize, respectively, between 2000 and early 2008.

The indictment states, “The defendants falsely and fraudulently stated to the IRS … that they were unable to pay their rent, were impoverished, and would be homeless if not for the kindness and support of their two children.”

A conviction for tax evasion carries a maximum penalty of five years in prison and/or a $100,000 fine, while a conviction for false statements carries a maximum penalty of three years in prison and/or a $100,000 fine.