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Quatlosers Hall of Shame

Jerome Schneider

Schneider has since served his six-month sentence, and been released. The information given below relates only to his past conduct, and should in no way whatsoever be indicative of his post-release activities or character. We hope that he has finally changed for the better.

These special-editions Quatloos commemorates those who have made a name for themselves in their particular business endeavors.

50 Q
Jerome Schneider

Our 50 Quatloo chip, known as a "Znoo", commemorates infamous offshore scam artists.

Jerome Schneider, who was convicted of computer fraud in the early 1970s. At some point, Jerome decided that he could be an offshore planner, and he ran cheesy advertisements in the in-flight magazines touting his books and seminars wherein he marketed his offshore planning services, including offshore banks. Jerome's several books are regarded by many asset protection planners and tax planners as the worst crap ever written about offshore planning.

The back of the chip represents the offshore jurisdictions as portrayed by offshore planners such as Jerome. Their materials would inevitably feature a beach with palm trees. While offshore planning was very popular in the late 1990s, by 2002, Congress had passed the Patriot Act and other legislation clamping down on foreign fund transfers and correspondent banking relationships, and the sun finally set on many of the offshore jurisdictions as deposits dried up.

On December 19, 2002, Jerome Schneider and Eric Witmeyer were indicted for conspiracy to defraud the IRS and wire fraud (see Press Release below), and are now featured in our Jerome Schneider Gallery which contains copies of Jerome's seminar flyers, in-flight magazine advertisements, and other doo-dads relating to Schneider.

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Pioneer of Sham Tax Havens Sits Down for a Pre-Jail Chat

November 18, 2004
By DAVID CAY JOHNSTON

SEATTLE, Nov. 17 - Jerome Schneider, the nation's best-known seller of fraudulent offshore banks, said in an interview today that he had helped hundreds of rich Americans evade taxes, including actors, celebrities and business owners.

Mr. Schneider, who pleaded guilty in February to conspiring to help his clients evade the tax laws, said that he expected "every single one" of his clients to be prosecuted or sued for the taxes they evaded. He said clients sought to evade taxes on incomes ranging from $100,000 to $40 million, though most were from a third to half a million dollars.

Mr. Schneider, 53, spoke in a cramped hotel room here under the watchful eye of three Internal Revenue Service criminal investigators, who said nothing but smiled broadly at times as he answered questions and named clients and associates. The I.R.S. set up the interview with Mr. Schneider but did not interfere with it. The agency, by law, cannot comment on individual taxpayers.

Under the terms of his agreement with the government to plead guilty, Mr. Schneider may not make any public comments about his former clients "without prior consent of the government." He is to be sentenced on Monday in Federal District Court in Los Angeles. In return for his cooperation, he is expected to serve no more than 24 months in prison. He has already paid $100,000 in restitution.

Mr. Schneider said he always reported his full income to the I.R.S. and never personally used an offshore bank to hide income.

Since 1976, Mr. Schneider has set up sham banks for clients in the Cayman Islands, Grenada, Montserratt, Vanuatu, the Cook Islands and, recently, in Nauru, a Pacific island.

Clients paid as much as $60,000 to "acquire" an offshore bank, which consisted of nothing more than pieces of paper to create the appearance of legitimate business activity, he said, confirming the accusations in the government indictment. He said that while most clients wanted to hide money from the I.R.S., some also wanted to conceal money from estranged spouses or creditors.

"Every one of my clients knew full well what they were getting into, including the potential to be prosecuted," he said, detailing how they signed contracts, were advised by lawyers and were told that if tax authorities ever caught onto them they could go to prison. "They understood that," he contended.

He said that all his clients had two things in common - they were rich and they wanted to escape taxes.

Most of the nation's major accounting firms worked with one or another of his clients, he said, and he named two law firms that he said were central to his business.

He said one prominent actress sent money to the United International Bank in Nauru, which he said he created. He said the actress paid $50,000 for a legal opinion asserting that the arrangement was legal.

Mr. Schneider also said that in 1988 he arranged for a prominent motivation coach to place $250,000 in an offshore bank without reporting the money to the I.R.S.

In addition, Mr. Schneider said that a billionaire media businessman, one of several clients who he said were on the Forbes 400 list of the wealthiest Americans, sent $40 million to a sham bank in Nauru to pay for a nut-processing company in 1994. The owner of the company has died, but his estate is challenging in Tax Court an I.R.S. demand that taxes be paid on profits from the sale.

For 28 years, Mr. Schneider promoted offshore tax schemes. He sold, he said, more than a million copies of his book, "The Complete Guide to Offshore Money Havens," which he advertised in The Wall Street Journal and SkyMall, a magazine found in the seat-back pocket on many airlines. The 2000 edition book carried an endorsement by Representative Billy Tauzin, the Louisiana Republican, who also spoke at one of Mr. Schneider's tax evasion conferences. Mr. Tauzin's spokesman, Ken Johnson, said the endorsement was "a stupid mistake."

Mr. Schneider, 53, who lives in Vancouver, British Columbia, was the picture of a successful businessman, dressed in a knit shirt, gray wool slacks and black loafers, his graying hair clipped short, his face framed by horn-rimmed glasses.

He began the interview by describing his conduct in terms of helping people, but when pressed he said, "Yes, I am a criminal."

Mr. Schneider said his undoing began the day more than a decade ago when he asked Jack Blum, a former United States Senate investigator, to speak at one of his offshore seminars. Mr. Blum, who specializes in exposing international financial crimes, wrote a letter to the Justice Department that prompted the investigation that led to Mr. Schneider's guilty plea.

Mr. Blum said, "That Schneider could operate openly for years, buying ads in the Wall Street Journal and the American Airlines flight magazine, shows the utter failure of tax law enforcement." He said law enforcement had known about Mr. Schneider for years, but failed to act.

The Senate Permanent Investigations subcommittee called Mr. Schneider as a witness in 1983 hearings on offshore tax evasion, and two years later the Comptroller of the Currency warned American banks about dealing with some of the offshore banks Mr. Schneider created.

The I.R.S., in court papers, said it began investigating Mr. Schneider in 1997, 14 years after his Senate testimony, because of the letter from Mr. Blum. It took five more years to obtain an indictment.

Today, Mr. Schneider said, he is broke. "I lost everything," he said. "My wife divorced me and with the legal fees, everything is gone."

Asked about the millions of dollars he earned setting up offshore banks, he replied, "It is gone, all gone."

Since he has held himself up as the world's leading expert on hiding money offshore, how could one know for sure if Mr. Schneider really is broke? The I.R.S. agents listening to the question put their hands to their mouths to repress grins.

"If you can find it," Mr. Schneider said, "I would say take it."

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NEW! Jerome Schneider Plea Agreement - Jerome sells his offshore clients out by agreeing to testify against them in exchange for a reduced sentence after pleading guilty to one count of conspiracy to defraud.

NEW! Schneider and Witmeyer Plead Guilty - Department of Justice Press Release.

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FOR IMMEDIATE RELEASE December 19, 2002

Actual Copy of Jerome Schneider's Indictment

U.S. Attorney Kevin V. Ryan and IRS Criminal Investigation Director of Field Operations Richard Speier, jointly announced the indictment yesterday of Jerome Schneider, age 51, and Eric J. Witmeyer, age 48, on one count each of conspiracy to defraud the Internal Revenue Service, 14 counts each of wire fraud and eight counts each of mail fraud. The two were indicted by a federal grand jury in San Francisco in connection with their alleged marketing and sales to U.S. taxpayer investors of offshore international banks or corporations and causing those entities to be "decontrolled" which is a process used by the defendants to attempt to conceal the U.S. taxpayer investor's ownership in the offshore bank or corporation.

According to the indictment, Mr. Schneider a U.S. citizen residing in Vancouver, B.C., and Mr. Witmeyer, a Los Angeles attorney, are alleged to have operated a scheme between January 1994 and December 2001, in which they offered for sale the stock of Nauru trading corporations licensed as international banks and other offshore corporations in an attempt to defraud the Internal Revenue Service. Nauru is an island nation located in Pacific north of the Solomon Islands. No business was conducted by any offshore entity sold by the defendants on Nauru nor was any bank account established on Nauru. Instead, the defendants would cause accounts in the name of the Nauru bank to be established in financial institutions located outside the U.S. The indictment alleges that the defendants used a scheme called "decontrol" to conceal the U.S. taxpayer's ownership in the offshore entity. Utilizing Mr. Schneider's businesses known as Premier Corporate Services, LTD, Premier Financial Advisors, LLC., Premier Management Services, LTD, Wilshire Publishing, and other entities, U.S. taxpayers paid him between $15,000 and $60,000 for an offshore entity. Mr. Witmeyer "decontrolled" the offshore entity for a fee of approximately $15,000. The indictment alleges that IRS undercover agents posing as prospective clients, met with the defendants and were told how the offshore entities being sold and the "decontrol" process could be used to evade taxes on income earned by the U.S. taxpayer or the offshore entity.

In the "decontrol" process structured by the defendants, the U.S. taxpayer investor paid defendant Schneider approximately $15,000 to $60,000 for the offshore entity and then defendants sold the U.S. taxpayer investor's interest in the offshore entity to a so-called "Independent Foreign Owner" (IFO) in exchange for a promissory note in an amount large enough to make it appear as if there was a bona fide and negotiated sale of the offshore entity to the IFO. The amount of the promissory note was arbitrarily set by the defendants. There were no negotiations between the U.S. taxpayer investor and the IFO as to the sale price of the offshore entity. The defendants advised the U.S. taxpayers that they could receive back the funds they had transferred to the offshore entity through tax free loans.

The maximum statutory penalty for conspiracy is in violation of 18 U.S.C. Section 371 is five years in prison and a fine of $250,000. The maximum statutory penalty for each count in violation of wire fraud and mail fraud in violation of 18 U.S.C. Section 1343 and 1341, is up to 5 years in prison and a fine of $250,000, plus restitution. However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court. An indictment simply contains allegations against an individual and, as with all defendants, Mr.Schneider and Mr. Witmeyer must be presumed innocent unless and until convicted.

Mr. Schneider's and Mr.Witmeyer's initial appearance in federal court has not yet been scheduled.

The prosecution is the result of a lengthy investigation by Internal Revenue Service Criminal Investigation division special agents and the US Attorney's office. Jay Weill who is Chief, Tax Division is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Legal Technician Kathy Tat. All press inquiries to the U.S. Attorney's Office should be directed to Assistant U.S. Attorney Matthew J. Jacobs at (415)436-7181.

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Courtesy of http://www.offshore business.com the following documents relating to Jerome are publicly available:

Search warrant relating to an IRS investigation into Jerome Schneider, Eric Witmeyer and others (6.06 MB in size, over 50 pages). Allow between five and 15 minutes to download, depending on speed of computer and Internet connection. Well worth the wait!

Wilshire Publishing Company v. Ray Jutkins and Rockingham Jutkins Marketing Inc. at British Columbia Supreme Court.

Stewart A. Green v. Premier Management Services Ltd. and Jerome Schneider at British Columbia Supreme Court.

A. Stewart Andree v Cloyd Francis Angle, with Jerome Schneider and Wilshire Publishing as third parties at British Columbia Supreme Court.

Actual Copy of Jerome Schneider's Indictment

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FOR IMMEDIATE RELEASE January 17, 2003
Actual Copy of Guilty Plea

Witmeyer Pleads Guilty to Evasion Scheme

The United States Attorney's Office for the Northern District of California announced that Eric Witmeyer, a Los Angeles attorney, pled guilty today to conspiracy to defraud the Internal Revenue Service in violation of 18 U.S.C. § 371.

Eric Witmeyer and his co-defendant Jerome Schneider were indicted by a Federal Grand Jury in San Francisco on December 19, 2002. They were charged with conspiracy and 22 counts of mail and wire fraud in connection with the marketing and sales to U.S. taxpayer investors of offshore international banks or corporations and causing those entities to be decontrolled which is a process used by the defendants to attempt to conceal the U.S. taxpayer's investor's ownership in the offshore bank or corporation. Under the plea agreement, Eric Witmeyer pled guilty to the conspiracy count.

In pleading guilty, Eric Witmeyer admitted that he and co-defendant Jerome Schneider conspired to defraud the United States by attempting to defeat and obstruct the lawful functions of the IRS in the ascertainment, computation, assessment and collection of income taxes owed by U.S. taxpayers. According to Mr. Witmeyer's plea agreement, Mr. Schneider marketed and sold to U.S. taxpayer investors offshore entities such as those licensed by the Island of Nauru as international banks and other offshore corporations. Mr. Schneider allegedly represented to U.S. taxpayers that by means of their ownership of the offshore entities, and so-called decontrol documents to be prepared by Mr. Witmeyer, or other counsel, the U.S. taxpayers could conceal from the Internal Revenue Service, their ownership and control of funds or assets they caused to be deposited into bank or brokerage accounts held in the name of the offshore banks in financial institutions located outside the United States. Mr. Witmeyer, further admitted that, at Mr. Schneider's direction and request and based upon documents supplied to him by Mr. Schneider, Mr. Witmeyer agreed to act as counsel for the U.S. taxpayers and prepare the so-called decontrol documents for the U.S. taxpayers who purchased an offshore entity from Mr. Schneider. The decontrol process included transferring the U.S. taxpayer's interest in the offshore entity to a so-called Independent Foreign Owner ("IFO") in exchange for a promissory note in an amount large enough to make it appear as if there was bona fide and negotiated sale of the offshore entity to the IFO. The amount of the promissory note was not the result of negotiations between U.S. taxpayers and the IFO. Rather, it was an amount set by Mr. Witmeyer and/or allegedly Mr. Schneider in discussions with the U.S. taxpayers. Mr. Schneider allegedly selected the IFO for the U.S. taxpayers and despite the purported decontrol of the offshore entity, Mr. Witmeyer understood that the U.S. taxpayers in fact owned and controlled the offshore entity and any accounts opened up in the name of the offshore entity in any financial institution located outside the United States. According to Mr. Witmeyer's plea agreement, he and Mr. Schneider used financial institutions and entities located outside the United States to conceal the activities of the offshore entities from the Internal Revenue Service.

The sentencing of Eric Witmeyer is scheduled for June 13, 2003 before Judge Susan Illston in San Francisco. The maximum statutory penalty for the conspiracy count in violation of 18 U.S.C. § 371 is 5 years and a fine of $250,000. However, the actual sentence is dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and will be imposed in the discretion of the Court.

The prosecution is the result of an investigation by agents of the IRS, Criminal Investigation division. Jay R. Weill is the Assistant U.S. Attorney who prosecuted the case.

A copy of this press release may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.cand.uscourts/gov. The IRS maintains a website which contains a warning notice to the public concerning potential abusive tax programs: http://www.treas.gov/irs/ci.

Tax shelter guru's partner pleads guilty, will testify

By Josh Richman
STAFF WRITER

Tuesday, January 21, 2003 - A Los Angeles lawyer has pleaded guilty to his role in a tax-evasion conspiracy and will testify against his alleged partner in crime, a sometime Bay Area man who claims to be "the world's leading authority on offshore banking and investing."

The plea bargain Eric Witmeyer, 48, took last week will probably put him in federal prison for up to a year, rather than the decades he might've faced had he been convicted of all the counts on which he was indicted last month.

In return, he'll cooperate with federal prosecutors, providing testimony and materials in the ongoing case against Jerome Schneider, 51, who has homes in Mill Valley and Vancouver, British Columbia.

Witmeyer admitted he and Schnei-der, who has been praised by the likes of House Energy and Commerce Committee chairman Bill Tauzin, ran a scheme from January 1994 to Decem-ber 2001 in which they offered for sale the stock of Nauru trading corporations licensed as international banks and other offshore corporations. Nauru is an island nation north of the Solomon Islands in the Pacific Ocean.

The two men allegedly took steps to conceal the U.S. investors' ownership of the offshore entities so they could avoid paying taxes on any money those entities made or on any money they earned here but hid there.

Investors allegedly paid Schneider from $15,000 to $60,000 to buy interests in the offshore businesses, and then paid Witmeyer about $15,000 to "decontrol," or mask their role.

Schneider allegedly marketed the sale of these offshore entities at workshops he called "Offshore Wealth Summits" held in places such as Vancou-ver; Cancun, Mexico; and Hawaii. At these workshops, Schneider presented speakers "such as Congressmen, politicians, public figures and others who did not speak about the purchase of offshore entities but who were presented by Schneider as speakers to impress the attendees," the indictment says; it doesn't name those speakers.

Schneider's Web site, which describes him as "the world's leading authority on offshore banking and inves-ting," includes a quote from Tauzin, R-Louisiana, describing the 2000 edition of Schneider's "Complete Guide to Offshore Money Havens" as "A serious contender for the best book on offshore banking I've ever seen."

ABC News in 2001 reported Tauzin had spoken at one of Schneider's seminars in Canada. In that report, Tauzin said he went as part of his campaign to repeal the income tax altogether, not to endorse Schneider's schemes. Asked if he regretted going, he answered, "Knowing what I know, yeah, of course."

Witmeyer pleaded guilty to one conspiracy count; Schneider still faces the same, plus 14 counts of wire fraud and eight counts of mail fraud. Each count is punishable by up to five years in federal prison and a $250,000 fine.

; fraud convictions could require paying restitution, too.

Witmeyer's sentencing is scheduled for June 13, but he has agreed with prosecutors to request delays until his cooperation is finished.

Contact Josh Richman at jrichman@angnewspapers.com.

FOR IMMEDIATE RELEASE

OFFSHORE TAX SHELTER PROMOTER
SENTENCED TO SIX MONTHS IN PRISON

The United States Attorney's Office for the Northern District of California announced that Jerome Schneider, a resident of Vancouver, B.C. Canada, was sentenced to six months in prison today by Judge Susan Illston in San Francisco for his role in a conspiracy to defraud the Internal Revenue Service. He was ordered to pay a fine of $4,000 and a $100 special assessment. He previously paid $100,000 in restitution.

On February 11, 2004, Mr. Schneider, 53, pled guilty to the conspiracy charge. As part of his plea agreement, Mr. Schneider agreed to cooperate with the government in its continuing investigation of the taxpayers who purchased offshore entities as well as others who might have advised those taxpayers. Schneider cooperated and appeared before the national media to discuss the illegal nature of tax shelters and offshore entities. At sentencing today, Judge Susan Illston said that the wrong message would be sent if Schneider received no jail time.

Jerome Schneider and his co-defendant Eric Witmeyer were indicted by a federal grand jury in San Francisco on December 19, 2002. They were charged with one count of conspiracy and 22 counts of mail and wire fraud in connection with the marketing and sales to U.S. taxpayers of offshore banks and/or corporations. The defendants then caused those entities to be decontrolled, which was a process used by the defendants to attempt to conceal the U.S. taxpayer's ownership in the offshore bank or corporation. This was done in order to evade IRS reporting requirements for taxpayers having an interest in foreign accounts and to evade the payment of tax on income transferred to and/or earned by the offshore bank accounts. Eric Witmeyer, an attorney, pled guilty to the conspiracy count on January 23, 2003, and agreed to cooperate with the government against Mr. Schneider.

In pleading guilty to conspiring to defraud the United States, Schneider admitted that he and Witmeyer conspired to defeat and obstruct the lawful functions of the Internal Revenue Service in its ascertainment, computation, assessment and collection of income taxes owed by U.S. taxpayers. He admitted marketing and selling to U.S. taxpayers offshore entities such as those licensed by the South Pacific Island of Nauru as international banks and other offshore corporations. These entities operated in Vancouver, B.C., Canada, under the names Premier Corporate Service, LTD; Premier Financial Advisors, LLC; Premier Management Service LTD and Wilshire Publishing.

Schneider represented to U.S. taxpayers that by means of their ownership of the offshore entities, and so-called decontrol documents to be prepared by counsel such as Witmeyer, the U.S. taxpayers could conceal from the Internal Revenue Service, their ownership and control of funds or assets they caused to be deposited into bank or brokerage accounts held in the name of the offshore banks in financial institutions located outside the United States. Witmeyer, at Jerome Schneider's direction and request, based upon form documents that Schneider supplied to Witmeyer, agreed to act as counsel for the U.S. taxpayer and prepare the so-called decontrol documents for the U.S. taxpayers who purchased an offshore entity from Schneider. Jerome Schneider marketed and sold offshore entities to U.S. taxpayers for approximately $15,000 to $60,000. Witmeyer "decontrolled" the offshore entity for a fee of approximately $15,000.

The so-called decontrol process included transferring the U.S. taxpayer's interest in the offshore entity to a so-called Independent Foreign Owner (IFO) in exchange for a promissory note in an amount large enough to make it appear as if there was bona fide and negotiated sale of the offshore entity to the IFO. The amount of the promissory note was not the result of negotiations between the U.S. taxpayers and the IFO. Rather, it was an arbitrary amount set by Schneider.

Jerome Schneider selected the IFO for the U.S. taxpayers and despite the purported decontrol of the offshore entity, Schneider understood that the U.S. taxpayers in fact owned and controlled the offshore entity and any accounts opened up in the name of the offshore entity in any financial institution located outside the United States. Jerome Schneider used financial institutions and entities located outside the United States to conceal the activities of the offshore entities from the Internal Revenue Service.

The prosecution is the result of an investigation by agents of IRS - Criminal Investigation. Jay R. Weill, Chief of the Tax Division prosecuted the case.

A copy of this press release and related court filings may be found on the U.S. Attorney's Office's website at www.usdoj.gov/usao/can. Related court documents and information may be found on the District Court website at www.cand.uscourts.gov or on http://pacer.psc.uscourts.gov. The IRS maintains a website which contains a warning notice to the public concerning potential abusive tax programs: http://www.treas.gov/irs/ci.

All press inquiries to the U.S. Attorney's Office should be directed to Luke Macaulay at (415) 436-6757 or by email at Luke.Macaulay3@usdoj.gov.

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