David L. Johnson, Tax Fraud, California 2011

Two Men Sentenced for Their Roles in California Tax Fraud Scheme

David L. Johnson, 73, of Loma Linda, and Michael L. Putnam, 68, of St. George, Utah, have been sentenced for their involvement in a massive tax fraud scheme that spanned years and cost investors millions of dollars.

The scheme, which was related to the Genesis Fund, a private investment fund marketed as investing in foreign currency trading, but actually operated as a Ponzi scheme, led to Johnson and Putnam facing serious charges.

According to court documents, Johnson was sentenced to 30 months in prison for filing two false tax returns that failed to disclose his bank account in Costa Rica to the IRS. He was also ordered to pay restitution of $2.3 million, with approximately $1.9 million going to investors in the Genesis Fund and $400,000 to the IRS.

Putnam, on the other hand, was sentenced to 12 months and a day in prison for conspiracy and tax fraud. He was also ordered to pay over $13 million in restitution, with approximately $10 million going to investors in the Genesis Fund and $3 million to the IRS.

Johnson and Putnam received significant distributions from the Genesis Fund that they hid in foreign bank accounts and failed to report to the IRS. Johnson received over $2.4 million, while Putnam received over $1.5 million.

Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, commended the efforts of special agents of IRS – Criminal Investigation in Laguna Niguel, Calif., for investigating the case, and Tax Division Trial Attorneys Lori A. Hendrickson, Matthew J. Kluge, Ellen M. Quattrucci and Danny N. Roetzel for prosecuting the case, with the assistance of the U.S. Attorney’s office in Los Angeles.

Johnson and Putnam are the 10th and 11th defendants to be sentenced for crimes related to the promotion of the Genesis Fund, a scheme that has left many investors financially devastated.

The case serves as a reminder of the importance of vigilance when it comes to investing in financial schemes, and the severe consequences that can result from participating in such activities.

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