DEPARTMENT OF JUSTICE FILES LAWSUIT TO STOP TAX EVASION SCAM

Florida Men Allegedly Sold Bogus Trusts, Helped Clients Hide Assets,
And Prepared Frivolous Tax Returns

WASHINGTON, D.C. - The Department of Justice today filed a lawsuit in federal court in Tampa, Fla., to stop Carel A. “Chad” Prater and his associate, Richard Cantwell, from promoting tax evasion scams that have cost the U.S. Treasury millions of dollars. In the lawsuit, the Internal Revenue Service estimates that Prater and his associates have been responsible for nearly $18 million in tax evasion. Today’s court filing asserts that although the IRS executed a search warrant on Prater’s businesses in March 2002, Prater continued to promote his tax evasion schemes as recently as last month.

“Tax evasion promoters enrich themselves by helping others to violate the tax laws,” said Eileen J. O’Connor, Assistant Attorney General for the Justice Department’s Tax Division. “The Justice Department will take the action necessary to shut down their scams.”

According to the complaint, Prater filed invalid “judgments” against the IRS, sold bogus trusts, hid clients’ income in anonymous limited liability corporations, filed frivolous tax returns, and tried to persuade employers to stop withholding taxes from his clients’ wages. Furthermore, court documents state that Prater and Cantwell - both of Sarasota, Fla. - continue to conduct nationwide seminars at which Prater promises to obtain refunds of previously-paid taxes and to make his clients’ income permanently tax free.

The complaint alleges that Prater charges up to $20,000 per client for his various services, and had received nearly $500,000 from clients in the six months before the search warrant was executed. It also alleges that Prater has developed over 950 clients.

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