Two Tampa Area Men Charged with Defrauding U.S. Government

You may have heard claims or seen ads touting a “proven method” to avoid paying federal income tax. Prosecutors clearly believe that this is too good to be true. Two Tampa Bay area men have been indicted in federal court for running such a scheme.

Joseph Nelson Sweet has been charged with conspiracy to defraud the United States, corrupt interference with the Internal Revenue Service (IRS), and criminal contempt. Also charged is Jack Lee Malone, who is facing only the conspiracy to defraud the U.S. charge.

Federal prosecutors allege that Sweet and Malone hooked up in 1999 to sell and promote a tax avoidance scheme. They reportedly told clients that purchasers could legally avoid the payment of federal income taxes. They recommended placing income and assets in “sham” trusts called Unincorporated Business Trust Organizations (UBTOs). Sweet and Malone sold these trusts and other materials through two other UBTOs, “They JoY Foundation” and “EDM Enterprises.”

Additionally, Sweet and Malone instructed their clients that income is generally not taxable and that filing a federal income tax return is a strictly voluntary act. The indictment also suggests that Sweet and Malone instructed clients to submit obstructive paperwork to deceive the IRS and to illegally conceal their income and assets.

The two were permanently enjoined from engaging in such behavior by a federal judge in 2002. Prosectors allege that the defendants disobeyed that order in 2005 and 2006.

The grand jury actually issued the indictments last September – but they remained sealed pending Sweet’s and Malone’s arrests. (Malone has not yet been arrested.) Sweet faces a maximum penalty of life in federal prison if convicted of all three counts. Malone faces a maximum penalty of five years in federal prison.

Multiple defendant cases are always interesting due to the possibility of one defendant/co-conspirator reaching a plea agreement to testify against the other. Criminal defense attorneys in such situations certainly explore that option with their clients and the prosecutors.