DEFENDANT TO SERVE 17 YEARS IN PRISON FOR SMUGGLING FREON
AND EVADING TAXES

Defendant Concealed Profits In Offshore Bank Accounts

WASHINGTON D.C. - Eileen J. O’Connor, Assistant Attorney General for the Tax Division, Department of Justice; Marcos D. Jiménez, U.S. Attorney for the Southern District of Florida; and Nancy Jardini, Chief, IRS Criminal Investigation, announced today that at the federal courthouse in Ft. Lauderdale, Florida, U.S. District Judge James I. Cohn sentenced Marc M. Harris to 204 months imprisonment, to be followed by 3 years supervised release, and a $20,324,560 fine. Mr. Harris was also ordered to pay restitution to the Internal Revenue Service in the amount of $6,588,949.50.

“Congress imposed excise taxes on the manufacture, importation, sale and use of chemicals that deplete ozone,” said Assistant Attorney General Eileen J. O’Connor. “People who violate those laws are not only evading taxes, but also harming the environment. They risk criminal prosecution and serious jail time.”

“For decades IRS special agents have aggressively investigated all forms of excise tax evasion whether the tax is imposed on fuel, tires or ozone-depleting chemicals,” said Nancy Jardini, Chief, IRS Criminal Investigation. “Individuals who illegally sell ozone-depleting refrigerant chemicals such as Freon to evade the excise taxes, not only defraud the government, but they also threaten our environment.”

Mr. Harris left Florida for Panama in 1989 and was returned to the United States after his arrest in Nicaragua in June 2003. On November 24, 2003, after trial, Mr. Harris was convicted of conspiring to defraud the Internal Revenue Service (18 U.S.C. § 371), conspiracy to commit money laundering and evading excise taxes (26 U.S.C. § 7201).

Congress imposed significant excise taxes to deter the sale or use of the ozone-depleting refrigerant chemical chlorofluorocarbon, commonly referred to by the trade name “Freon.” From 1992 through 1994, the years involved in this case, the excise tax rose from $1.67 per pound to $4.35 per pound of Freon.

Evidence introduced at trial established that Mr. Harris conspired with Aurelio Vigna, Joseph Vigna and others to evade federal excise taxes on the sale of Freon to customers in South Florida. They failed to report and remit those taxes to the Internal Revenue Service and filed phony paperwork to conceal domestic sales of illegally imported Freon. To hide the sales proceeds, Mr. Harris also created and used domestic and foreign shell corporations and related bank accounts. He laundered more than $8 million in proceeds generated from the Freon smuggling scheme for Aurelio and Joseph Vigna by use of a series of wire transfers through Panamanian corporations and bank accounts. As a result of the scheme, between January 1993 and June 1994, Mr. Harris evaded approximately $6.2 million in excise taxes and also helped his co-conspirators allegedly evade additional individual and corporate income taxes on the profits.

Justice Department Tax Division trial attorneys Shelly L. Goldklang and Gregory E. Tortella prosecuted the case. Special agents of the Internal Revenue Service, and the United States Customs Service and the Environmental Protection Agency also provided assistance that was essential to the successful investigation and prosecution of the case.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at www.usdoj.gov/tax.

###

04-354