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Orono Businessman Pleads Guilty to Multi-Million Dollar Tax Fraud Scheme
A 55-year-old Orono businessman, Scott Phillip Flynn, has pleaded guilty to a multi-million dollar tax fraud scheme in a Minnesota court.
Flynn pleaded guilty to one count of conspiracy to defraud the United States and one count of filing a false tax return. The charges were initially filed on December 21, 2016.
According to the prosecution, Flynn devised a complex fraud scheme by creating a labyrinth of business entities and layers of obfuscation to hide tens of millions of dollars from the IRS. He generated his income using an alias name while hiding behind randomly-named Nevada-based companies titled in the name of his father.
Flynn sent the income he earned in this way to Australia to be held by nominees, and then repatriated the money indirectly, sometimes through Costa Rica. He acknowledged at his plea hearing that he took these steps to defraud the Internal Revenue Service. Flynn’s scheme was animated by his desire to live a luxurious lifestyle unencumbered by income tax liabilities, a desire fulfilled by his purchase of a $2.7 million mansion in Orono with untaxed income repatriated through Costa Rica.
“Conspiring with others to defraud the government with an elaborate stock scheme to underreport taxable income is unlawful and is also unfair to every taxpayer who obeys the law and pays their fair share,” stated Acting Special Agent in Charge Gabriel Grchan, St. Paul Field Office IRS Criminal Investigation.
According to the defendant’s guilty plea and documents filed in court, between 2005 and 2015, Flynn evaded the assessment of millions of dollars in income taxes by fraudulently hiding millions of shares of stock that he obtained for himself, his father, and entities they controlled (collectively, the “Flynn Group”). In 2006 and 2008, Flynn assisted two privately-held Wisconsin-based companies, Tower Tech Systems, Inc. and Advanced Fiberglass Technologies, in becoming publicly traded through stock-for-stock “reverse merger” transactions.
As compensation for Flynn’s work, millions of shares of publicly-traded stock in the resulting public companies were transferred to “Integritas, Inc.” and “Diversified Equities Partners,” both of which were part of the Flynn Group. Flynn, who exercised control over the stock, which had considerable value, was required to, but did not, report the receipt of the shares of stock as income on his individual income tax returns, or on the tax returns of members of the Flynn Group.
Key Facts
- State: Minnesota
- Category: White Collar Crime|Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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