2 Men Found Guilty in $20-Million Tax Scheme

From Staff and Wire Reports

Two Sacramento-area men have been found guilty of a tax scheme that federal authorities say may have cost the government $20 million in taxes.

Internal Revenue Service agents said Herbert Bates of Sacramento County and David Larry Smith of Auburn created bogus tax shelters that were sold to at least 249 investors.

Smith, 58, and Bates, 70, were each found guilty Thursday of three conspiracy counts and 21 counts of helping clients file false tax returns.

Smith was also found guilty of 26 counts of mail fraud, seven counts of wire fraud and 51 counts of money laundering.

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