FOR IMMEDIATE RELEASE                                         TAX
FRIDAY, APRIL 5, 1996                              (202) 514-2008
                                               TDD (202) 514-1888

    SIX PROMOTERS OF LONG-RUNNING TAX EVASION SCHEME SENTENCED

     WASHINGTON, D.C. -- A federal judge today sentenced six
Minnesota residents convicted of income tax evasion to prison
terms ranging from 10 to 96 months, the Department of Justice
announced.  
     They were convicted last November for operating and
promoting a tax-evasion scheme for almost 14 years, including
several years in defiance of a court order to stop, the
Department said. 
     U.S. Attorney David L. Lillehaug of Minneapolis and
Assistant Attorney General Loretta C. Argrett of the Tax Division
said the sentences were imposed by Judge Michael J. Davis of U.S.
District Court in St. Paul, Minnesota, on James Noske and his
sister, Joan, John Ellering and Imelda Spaeth, all of Richmond,
Minnesota; and Loren Scherping and his brother, Laverne, of
Freeport, Minnesota.  
     "This was an intricate and complex case that took many
months to develop and involved the presentation to the jury of
more than 30 witnesses and 600 exhibits," said Argrett.  "We hope
it sends a clear and loud warning to other would-be tax dodgers
that we will investigate and prosecute vigorously those who try
to cheat the government." 
     Lillehaug commented, "No one loves to pay taxes, but each of
us must pay a fair share.  This case puts away some of
Minnesota's most notorious tax evaders who urged others to do
likewise."
     James Noske, the central figure and leader of the group, was
sentenced to 96 months imprisonment with three years supervised
release.  Joan Noske was sentenced to 78 months imprisonment with
three years supervised release.  John Ellering was sentenced to 
30 months imprisonment with three years supervised release.
Imelda Spaeth was sentenced to 10 months imprisonment and three
years supervised release.  Loren Scherping was sentenced to 12
months imprisonment and three years supervised release.  And
Laverne Scherping was sentenced to 12 months imprisonment and
three years supervised release.
     Davis denied bond pending an appeal.  He ordered the
defendants to surrender voluntarily, except for James Noske who
was taken into custody.  
     James and Joan Noske, John Ellering, Imelda Spaeth and Loren
and Laverne Scherping were convicted November 9, 1995, of
numerous felony charges following an eight-week trial.
     The Noskes, Ellering and Spaeth were convicted of conspiring
to defraud the United States by operating and promoting an
intricate tax evasion scheme that used hundreds of so-called
"business trusts" and dozens of allegedly non-profit corporations
to evade paying about $1.4 million in federal income taxes.  They
operated the scheme for nearly 14 years, continuing the illegal
operation even after the U.S. District Court in St. Paul issued
an injunction in 1984 ordering the Noskes to discontinue
promoting the trusts.    
     James and Joan Noske and Loren and Laverne Scherping also
were convicted, in a separate felony count, of conspiring to
evade the payment of nearly $500,000 in income taxes owed by the
Scherpings. Additionally, James and Joan Noske were convicted of
tax evasion with resect to the Scherpings' income tax liabilities
and Joan Noske was convicted of five counts of structuring
financial transactions for the Scherpings to evade the filing of
federal currency transaction reports.     
     James Noske was found guilty of conspiracy to defraud the
United States, conspiracy to evade the payment of income taxes
and tax evasion.  Joan Noske was found guilty of two counts of
conspiracy, one count of tax evasion and five counts of
structuring financial transactions to evade the filing of
currency transaction reports.  Ellering and Spaeth were found
guilty of conspiring to defraud the United States and the
Scherpings were found guilty of conspiring to evade payment of
income taxes.  A seventh defendant, Dwaine Weber, was acquitted
of conspiracy to evade payment of the Scherpings' income taxes.
     The investigation was conducted by the Criminal
Investigation Division of the Internal Revenue Service.  The
prosecution was handled by Department Tax Division Trial
Attorneys Corey J. Smith and Wade W. Parrish. 

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