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FRIDAY, SEPTEMBER 16, 2005 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

Two CPA's Sentenced in $120 Million

International Tax Shelter Case
WASHINGTON, D.C. - The Department of Justice and Internal Revenue Service
(IRS) announced today that Chief U.S. District Court Judge John C. Coughenour
sentenced two Anderson's Ark & Associates (AAA) accountants for aiding and
assisting in the preparation and filing of fraudulent income tax returns. Tara
LaGrand, of Naples, Florida, was sentenced to 24 months in prison, to be followed
by one year of supervised release. Lynden Bridges, of Wheat Ridge, Colorado, was
sentenced to 18 months in prison, to be followed by one year of supervised release.

LeGrand and Bridges, each a Certified Public Accountant, were part of AAA, an
organization through which fraudulent tax shelters and investment scams were
promoted and sold. From 1996 through 2001, AAA had approximately 1,500 clients,
nearly 300 of whom reported over $120 million in fraudulent income tax

"People who participate in tax fraud schemes, including preparing fraudulent tax
returns, should expect to be prosecuted, convicted, and sentenced to substantial time
in jail," said Assistant Attorney General Eileen J. O'Connor of the Justice
Department's Tax Division.

In late November—December of 2004, the Justice Department prosecuted 10 AAA

promoters and accountants in Seattle, Washington. On December 27, 2004, a jury
convicted six defendants: Keith Anderson; Wayne Anderson; Richard Marks;
Karolyn Grosnickle; James Moran; and Pamela Moran on charges of conspiracy to
defraud the government, mail fraud, wire fraud, money laundering, and aiding and
assisting the filing of false tax returns in connection with their promotion and sale
of these fraudulent AAA schemes. In April 2005, those six defendants were
sentenced to lengthy terms of imprisonment ranging from seven to 20 years. More
information about the conviction and sentencing of those AAA defendants may be
found on the Tax Division website at

At the conclusion of the December 2004 trial, the jury was unable to reach a verdict
as to Tara LaGrand, Lynden Bridges, and two other defendants. However, all four
later pleaded guilty to felony charges, with Tara LaGrand and Lynden Bridges
pleading guilty to charges of aiding and assisting the preparation and filing of
fraudulent income tax returns. In their plea agreements, they admitted that they each
assisted AAA clients by preparing and filing the partnership agreements, promissory
notes, and income tax returns required to implement the "Look Back" program—
one of two fraudulent schemes promoted by the AAA organization.

"Taxpayers should not be fooled by clever accounting practices that sound too good
to be true," said Nancy Jardini, IRS Chief, Criminal Investigation. "Accountants
should be the pillars of our system of taxation, and we simply can't tolerate flagrant
abuse of the law. This week's sentencings reflect the government's efforts to stop
both the promoters and the investors of these types of abusive schemes."

Indictments also have been returned against 15 AAA clients nationwide, several of
whom have pleaded guilty. Most recently, on September 13, 2005, a jury in
Milwaukee, Wisconsin, convicted one AAA client, Glen J. Murphy, of seven counts
of filing false tax returns and three counts of willfully failing to file income tax
returns. Each of the seven counts of filing a false return carries a maximum penalty
of three years imprisonment and a $250,000 fine, while the remaining three counts
of willful failure to file each carry a maximum penalty of one year imprisonment
and a $100,000 fine.

At the Murphy trial, the government introduced evidence establishing that Murphy
became an AAA client and purchased the "Look Back" and "Look Forward" tax
evasion programs. These schemes used phony partnerships to create fictitious
partnership losses and false business expenses. According to the trial evidence,
using the "Look Back" program, Murphy created a fictitious partnership loss in
1997 that eliminated his current tax year obligations and carried back the remainder
to the tax years 1994, 1995, and 1996, resulting in a fraudulent tax refund of
approximately $60,000. He also used the "Look Forward" program to create false
advertising and marketing expenses for his chiropractic business in the 1998-2000
tax years. Murphy also failed to file individual income tax returns for tax years

Assistant Attorney General Eileen J. O'Connor and John L. McKay, U.S. Attorney
for the Western District of Washington, thanked Tax Division Trial Attorneys
Corey J. Smith and Krista Tongring, and former Tax Division Trial Attorney M.
Kendall Day, who prosecuted the case against the AAA promoters and accountants.
Assistant Attorney General O'Connor and Steven M. Biskupic, U.S. Attorney for the
Eastern District of Wisconsin, thanked Tax Division Trial Attorney Larry J.
Wszalek and Assistant U.S. Attorney, Matthew L. Jacobs, who prosecuted the
Murphy case. All thanked the special agents of the IRS, whose assistance was
essential to the successful investigation and prosecution of both cases.

Additional information about tax fraud schemes to watch out for may be found on
the IRS Criminal Investigation website

Additional information about the Justice Department's Tax Division and its
enforcement efforts may be found at