Friday, May 14, 2010

Ellefsen asks for home incarceration, community service

In a sentencing memorandum filed Thursday in U. S. District Court for the Western District of Missouri, Carthage accountant Mark Ellefsen asked to be allowed to serve his time at home and be allowed to do community service.

In the eight-page document, Ellefsen's attorney notes that Mark Ellefsen "did not participate" in the tax avoidance scheme that has him and his brother Brian, a Carthage physician, facing a June 2 sentencing after being found guilty of fraud and filing false tax returns.

M. Ellefsen's participation in the scheme was outlined in the documents:

The Aegis Trust System was started in Chicago, Illinois, by Edward Bartoldi, a graduate of Harvard Law School, and Michael Vallone. The Internal Revenue Service began its nine-year investigation of Aegis in June 1996. Undercover agents, such as Michael Priest, were fully involved with Aegis by 1998, even attending offshore seminars. At one point, the Aegis system was presented to the Pennsylvania and Ohio Bar Associations during CLE’s.

At another, the system was presented at insurance seminars as a legitimate way to decrease taxes and increase the ability of one to make charitable contributions. In hindsight, one wonders how such things could happen, but they did. And when they did, these events were used to affirm and reaffirm the legitimacy of the Aegis Trust System to its clients nationwide. Fancy offices and limousines and inches thick manuals packed with faux legalities were all deployed against Aegis’ own customers to convince them they were doing something that was perfectly legal, something that the nation’s elite families did all the time. When a question was raised by a client, Aegis made certain that the advice they received was all “in house.” A cease and desist order was never sought to prevent Aegis from doing business. 

At its height, Aegis had over six hundred clients. Only a handful of clients were prosecuted; the rest were settled civilly.
Brian Ellefsen became a client of Aegis after he was solicited by a so-called “tax and trust expert,” Jim Quay, who was the brother of an Emergency Room doctor working at McCune-Brooks Hospital in Carthage, Missouri. The initial sales pitch was asset protection from malpractice and divorce, along with substantial tax avoidance. As office manager, Mark Ellefsen was asked by his brother to look into the Aegis program.

Mark Ellefsen did not personally participate in Aegis program and there has never been a question as to the accuracy of Mark Ellefsen’s personal returns. With regards to his personal returns, Mark has always been an honest taxpayer. Mark Ellefsen was paid a straight salary as office manager and received no economic benefit from his brother’s participation in the Aegis scheme. Mark Ellefsen erroneously believed that he was not personally responsible for the way his brother chose to handle his income taxes.

Apart from his involvement in this incident, Mark Ellefsen has always been a law-abiding citizen. From August 1994 until March 1995 he served as a police officer with the St. Louis County Police Department. Mark enlisted in the United States Army in 1988. Since that time he has provided exceptional service and was commissioned in 1991. Records from the U.S. Army National Guard confirm his exceptional service and he has numerous positive evaluations. Mark has been described as a highly-disciplined soldier.
Later in the filing, M. Ellefsen's lawyer make the argument for a lighter sentence:

It is submitted that a sentence of home incarceration combined with community service would be sufficient to reflect the seriousness of the offense, protect the public from future crimes, promote respect for the law, and provide just punishment. A sentence of home incarceration and community service is still very serious and would provide deterrence to others who would consider engaging in such conduct. Mark Ellefsen certainly understands the seriousness of his offense. He has learned a tremendous amount from the experience and has vowed to never be involved with this type of activity

Mark Ellefsen has not committed an act of violence and the public should not require any protection from any possible future crime.

The document also noted that a lighter sentence would enable M. Ellefsen to be able to make restitution to victims of the crime.

1 comment:

Anonymous said...

Selective prosecution? Did they do it because they thought they would get good publicity?

Deterrent effect of successful prosecution would result,as Ellefsen is one of only two orthopedic surgeons in the
Carthage, MO, area. Residual publicity from the AEGIS
investigation would effect the publicity on this case,
and results of the AEGIS litigation would also affect
this case.

December 4, 2009

(Promoters Criminals – Clients Victims unless you are an Ellefsen)

The evidence showed that Aegis and its representatives caused taxpayers to assign and transfer some or all of their income and assets to the trusts, then omit or deduct the amount of the assignments and transfers from their individual tax returns.

The most egregious example of the use of the Aegis system presented during the trial was the testimony of David Kindred. Kindred testified that he is a medical doctor specializing in obstetrics and gynecology. He has been in solo practice in Morton, Illinois, since 1994. Kindred testified that Defendant visited him at his home in 1996. Kindred stated that, in December 1996, he paid Aegis $45,000 for the trust system. Midwest received $20,200 of this amount as a commission. Kindred also paid annual management fees in the amount of $6,000 to Midwest. Kindred testified that Defendant accepted the management fees. Based upon Kindred's testimony and the documents introduced into evidence, the Government showed that Kindred, who earned as much as $1,000,000 per year from his medical practice, paid almost nothing in taxes for the tax years 1996, 1997, 1998, 1999, and 2000. Astoundingly, in 1997, Kindred received an earned income credit of $754. Kindred testified that Buenting prepared his income tax returns for the 1996 and 1997 tax years and Dillon prepared his tax returns after that. Kindred testified that, in 1998, he received a letter from Merrill Lynch which indicated that it would not open an account for Kindred's Aegis trust because those types of
trust could be used to illegally shelter assets from the IRS and were the subject of an ongoing IRS investigation. Kindred faxed the Merrill Lynch letter to Midwest. On June 16, 1998,Defendant faxed a copy of the letter to Vallone with a cover letter in which Defendant said, "I need to know how you wish to proceed with this matter." The evidence showed that Kindred did come to the attention of the IRS and Kindred received his first IRS audit letter in May 2001. Kindred testified that Defendant was involved in responding to the IRS. Kindred testified that Defendant never told him to cooperate with the IRS. Kindred testified that he has paid some back taxes and penalties to the IRS. Kindred testified that he invested $1,000,000 with an Aegis related entity, through Defendant and Vallone, and was told that the money he invested was stolen. Kindred testified that he is currently trying to claim the $1,000,000 as a business loss with the IRS.

Dr. David Kindred was not criminally charged. Read the whole opinion to see the other Aegis clients that were not charged and testified on behalf of the government.