8 Indicted in Bogus Tax Shelter Schemes

A Huntington Beach man alleged to have been the chief California disciple of two bogus tax shelter programs was named in a 30-count federal indictment Wednesday along with seven others. Charles D. Spurrier, 67, allegedly sold taxpayers bad advice on how to convert taxable to non-taxable income, how to become “non-taxpayers” and how to hide assets from tax officials, according to the indictment.

Spurrier faces a maximum of 39 years in prison and a $52,000 fine if convicted on all counts of the indictment, in which he is charged with mail fraud and preparing false tax returns.

5,000 Participants

Armed with two schemes created by tax advisers who were subsequently imprisoned, Spurrier persuaded 5,000 California residents to pay more than $11.2 million into the bogus schemes, federal prosecutors said.

Prospective clients between 1980 and 1984 were told that by signing “Intrusted Personal Services Contracts” they could escape federal tax liability on all their income. For a 10% fee, Spurrier, his sales force and tax preparers offered to convert to non-taxable income as much money as clients chose to provide, according to the indictment.

Some clients would regularly turn over paychecks to the Spurrier operation and receive supposedly non-taxable “gift” checks in return, worth about 90% of the money turned over. A check of Spurrier accounts showed that about $10.1 million in “gift” checks were given to clients, according to the indictment.

The tax shelter was created by Frank Forrester of New York, who was convicted of criminal contempt of court in 1984 for refusing to stop promoting the program, a spokeswoman for U.S. Atty. Robert C. Bonner said. Forrester died in prison.

Spurrier allegedly advertised that the scheme would legally provide “zero” tax liability when he knew that courts in Minnesota had already declared the plan illegal, according to the indictment.

In addition to the Forrester program, Spurrier also allegedly promoted a scheme in which people were assured that they could legally convert their status to “non-taxpayers.” The plan was created by Burton D. Linne of Arlington, Va., who prosecutors said is serving a sentence in federal prison for tax-related offenses.

Under the Linne plan, prospective customers were told that by filing various documents and declarations with state and federal agencies they would be relieved of the burden of paying taxes. The scheme drew 23 investors who paid Spurrier and others $42,500 for forms, newsletters, tapes and other tax-preparation advice, according to the indictment.

Part of the scheme involved counseling taxpayers to hide assets by concealing the receipt of income and avoiding maintaining normal business records to fool the Internal Revenue Service, the indictment alleges.

In a third variant, Spurrier developed his own tax shelter called an Alpha plan. More than 500 customers were induced to sign a contract by which they purchased a master tape providing a tax strategy over many years. The plan cost $12,000, prosecutors said. Deductions suggested by Alpha that customers sought were disallowed by the IRS.

Spurrier worked out of Alpha Productions, 2120 Main St., Huntington Beach.

Others accused of mail fraud and preparing false tax returns who allegedly worked with Spurrier are:

- Dennis C. Spurrier, 34, of Huntington Beach, son of Charles Spurrier. If convicted, Dennis Spurrier faces a maximum sentence of 17 years in prison and a $30,000 fine.

- Hyrum J. Amundsen, 74, of Santa Ana, who could receive 23 years in prison and a $40,000 fine if convicted. His wife, Eva, 63, faces the same maximum penalty if convicted.

- Leon G. Hill, 44, of Mission Viejo, who faces 23 years in prison and $40,000 in fines if convicted.

- Wayne G. Hill, 32, of Fountain Valley, who could face 14 years in prison and $25,000 in fines.

- Thomas R. Smith, 37, of Orange, who could face 29 years in prison and $26,000 in fines.

- Richard E. Dunn, 57, of Costa Mesa, who faces 30 years in prison and $15,000 in fines if convicted.

They are scheduled to be arraigned in the federal courthouse in Santa Ana on April 25.