Refco Chief Target of FBI Tax Probe

Federal authorities are investigating whether an influential brokerage executive invested millions of dollars in a possibly illegal tax shelter, according to a published report.

The FBI is trying to determine whether Thomas Dittmer, chairman of Refco Group Ltd., one of the nation’s largest futures brokerages, improperly shielded from the Internal Revenue Service up to $10 million in income in 1982 and 1983, the Chicago Tribune reported.

Federal agents believe that Dittmer is one of many commodities-related businessmen who made money-losing investments overseas that enabled them to avoid paying U.S. taxes on some of their earnings, including profits from their own trades at commodity exchanges in Chicago and other cities, the newspaper said, citing unidentified sources.

The sources said Dittmer and others may have subtracted the overseas losses from their earnings to lower the portion of their total incomes subject to federal taxes.

The actions would be legal if overseas losses stemmed from legitimate investments, but investigators suspect that some of the transactions involved phony paper work to describe investments that never occurred, the Tribune said.

Dittmer, a Lake Forest resident whose name often appears on lists of America’s wealthiest individuals, denied repeated requests for an interview, the Tribune said.

Sources say Dittmer’s attorney claims that the executive did not knowingly violate any law and believed that the transactions were legitimate, the Tribune reported.

The inquiry into the alleged use of tax shelters does not appear to be connected to a 2-year federal probe of the Chicago Board of Trade and the Chicago Mercantile Exchange, which has resulted in the indictments of 46 traders.

Terree Bowers, an assistant U.S. attorney in Los Angeles who is supervising one aspect of the tax shelter probe, said futures traders and other businessmen may have used losses from overseas investments to shave up to $500 million from their taxable incomes in the early 1980s.

Investigators also are focusing on several Chicago businessmen whom they suspect acted as intermediaries in arranging the overseas investments for Dittmer and other brokers and traders, the Tribune said.