‘Hiding Your Money’ Author, L.A. Lawyer Indicted in IRS Case

Jerome Schneider, author of “Hiding Your Money,” and Los Angeles attorney Eric Witmeyer were indicted Thursday on charges of conspiring to defraud the Internal Revenue Service and of wire and mail fraud.

The indictments were the latest volley in redoubled efforts by the IRS to crack down on offshore accounts that the government believes U.S. citizens use to hide billions of dollars in assets and income.

According to the indictment, Schneider, who lives in Vancouver, Canada, promoted tax fraud through the use of offshore banks. He marketed the program through books published by a Manhattan Beach company that he allegedly controls and through advertisements in newspapers and in-flight magazines such as American Way and Sky Mall.

The indictment said he also hosted “offshore wealth summits” -- attended by congressmen and other public figures -- in Canada; Cancun, Mexico; and Hawaii.

Schneider would get wealthy clients to pay $15,000 to $60,000 to buy the shares of dormant companies with banking licenses in the island nation of Nauru -- a tiny Pacific island with few people but many banks, according to the indictment, which was handed up by a federal grand jury in San Francisco.

Witmeyer then would charge the client an additional $15,000 to obscure the investor’s ownership through a so-called decontrol process, according to legal papers filed in the case.

Although it is not illegal to own shares in an offshore bank or to deposit money offshore, U.S. residents must report their income -- no matter where it was earned -- and pay tax on it.

Schneider’s attorney, Los Angeles criminal defense lawyer Harlan Braun, maintains that his client is an honest businessman whose operations are simply misunderstood.

“Mr. Schneider has set up offshore banks for years,” said Braun, “but offshore banks have both legal purposes and illegal purposes. Mr. Schneider’s position is that he has told people you cannot use them for tax evasion.”

Witmeyer could not be reached for comment.

The indictment was the result of a five-year investigation involving two undercover IRS agents who posed as prospective clients.

The government alleged in court documents that Schneider and Witmeyer not only helped U.S. residents buy banks, but also told them that the entities would allow them “to evade the payment of income tax on income earned or gain realized by the offshore entity.”

The pair were indicted on one count of conspiracy to defraud the IRS, 14 counts of wire fraud and eight counts of mail fraud. If convicted of all charges, each man could face up to 115 years in prison, according to the U.S. attorney’s office in San Francisco.