SOUTH LAKE TAHOE, Calif. – Four individuals, including a South Lake Tahoe accountant, are awaiting sentencing after a federal jury in the District of Colorado convicted the four of conspiracy to defraud the United States with their trust tax evasion scheme that caused approximately $40 million in losses to the government.

“The defendants orchestrated an abusive trust tax scheme designed to help clients evade their tax obligations through a web of sham trusts, false representations, and fraudulent transactions,” said Colin M. McDonald, Assistant Attorney General for the National Fraud Enforcement Division.

One of the four, Weldon Wulstein, reportedly has had financial service offices in South Lake Tahoe and Douglas County.

Wulstein was convicted of preparing hundreds of false tax returns for clients under a fraudulent structure, called a tax shelter. He did so along with another convicted, Suzanne Thompson.

As laid out in court documents and evidence presented at trial, Wulstein and Thompson, along with Marcia Predmore and Roderick Prescott, promoted the trust tax shelter to hundreds of high-net-worth business owners across the country.

The tax shelter consisted of four trusts: a business trust, a family trust, a charitable trust, and a private family foundation.

The division alleged that the four taught clients how to use the layered trust tax shelter to evade paying federal income taxes on 98% or more of their business profits, using tactics such as claiming tax deductions for non-deductible personal living expenses and making fraudulent charitable contributions.

The National Fraud Enforcement Division reports that some of the promoters marketed this tax shelter at seminars held across the country.

The division says the tax shelter cost between $25,000 to $50,000 to set up.

All four could receive the maximum penalty of five years in prison for conspiracy to defraud the United States through promoting the scheme.

Wulstein and Thompson face a maximum penalty of three years in prison for each count of assisting in the preparation of false tax returns.

“These defendants were repeatedly warned by attorneys, CPAs, financial professionals, and IRS guidance that this trust-based scheme was illegal, yet they chose to ignore those warnings. Their conspiracy was a deliberate attempt to conceal income and undermine the integrity of our nation’s tax system while lining their own pockets through their lies,” said Amanda Prestegard, Special Agent in Charge, IRS-CI Denver Field Office. “We appreciate the jury’s verdict and the message it sends to those who promote or engage in abusive tax schemes. IRS-CI will continue to partner with DOJ-Tax to pursue these criminal tax evaders.” 

A federal district court judge will determine their sentences after considering the U.S. Sentencing Guidelines and other statutory factors.

“Tax fraud schemes undermine the integrity of our tax system and deprive the government of resources,” McDonald said, “shifting the burden to honest Americans who follow the law. Today’s trial convictions underscore the Fraud Division’s commitment to holding accountable those who promote and profit from abusive tax shelters and other fraud schemes.”

IRS Criminal Investigation is also investigating the case.