Mining Executive Indicted in Tax Fraud Scheme

A Calabasas mining executive was indicted Wednesday on charges that he induced investors, including comedian Dom DeLuise, to claim inflated income tax deductions for investments in a Colorado gold mine.

An estimated $55 million in false deductions were claimed based on investments in two Woodland Hills mining companies owned by Phillip F. Myers, 51, according to the indictment returned by a federal grand jury in Los Angeles.

Investors in Myers’ Omni Resource Development Corp. and American International Mining Co. included DeLuise and his wife, Carol, Texas heart surgeon Michael E. DeBakey and sportscaster Lynn Swann, former wide receiver for the Pittsburgh Steelers.

Mary McMeniman, spokeswoman for the U.S. attorney’s office, said Myers allegedly encouraged investors to invest money for development of gold mines in Colorado and New Mexico and sign promissory notes for many thousands of dollars more.

Counseled Investors

Myers then counseled investors to deduct both the investment and the promissory note from their taxes, even though they had made no payments on the notes, McMeniman said. A typical investor may thus have taken a $60,000 tax deduction while actually investing only $10,000.

Meanwhile, Myers made it appear as though the note money existed and was being spent by running the original investment money in a fraudulent “check loop” through several bank accounts, federal prosecutors say.

In the end, more that $66 million in mining development expenses were claimed, of which $55 million were generated through the “check loop,” the indictment alleges.

There are no allegations of wrongdoing on the part of the investors, who claimed deductions ranging from $300,000 in DeLuise’s case to $60,000 in DeBakey’s case. Swann and his wife claimed $120,000 in deductions.

Neither Myers nor his attorney could be reached for comment Wednesday.