Asset Protection Schemes Which Involve Hiding Assets, Income, And Activities In Sham Or Abusive Trusts Or Other Purported Entities

Enter Source, Feb 28, 2005

Timothy B. Burnham was sentenced to 37 months in federal prison and $3,920,224.00 in restitution. Burnham was a prominent lawyer in Louisiana who was employed by Banyan as "Attorney and Manager of Trusts, Foundations, and Endowments." Burnham was a major salesman for Banyan. He also played an important role justifying the use of sham or abusive trusts to evade IRS and SEC scrutiny over Banyan, thereby making the crimes harder to detect and prevent. He pleaded guilty to conspiracy to sell unregistered securities and has agreed to surrender his law license and not seek reinstatement for two years.

Philip B. Greer was sentenced to 120 months in federal prison and approximately $28 million in restitution. Greer and Vaughan established a business association in about 1995-96 in which Greer came to concentrate on trading the funds and making representations to investors and potential investors about the trading program, and Vaughan concentrated on marketing the investment and handling administration of the funds. Banyan convinced many investors that Greer was the purported recipient of God's gift of a miraculous and secret trading strategy which had no risk and which made high consistent profits without losses. Instead, Greer rapidly lost most funds he actually traded. On June 5, 2001, Greer pleaded guilty to conspiracy to commit mail, wire, bank, and securities fraud and to sell unregistered securities, a separate conspiracy to commit money laundering, two counts of money laundering to evade taxes, two counts of money laundering to promote the Banyan fraud scheme, and one count of fraud in the operation of commodities trading fund.

Howard T. ("Hal") Prince, III, was sentenced to 20 months in federal prison and approximately $28 million in restitution. Prince helped Vaughan plan the formation of Banyan in 1996, and became a paid solicitor and the sales manager for Banyan in early 1997. He pleaded guilty to conspiracy to sell unregistered securities, and testified at Stewart's trial.

One other defendant has pleaded guilty to offenses arising out of the Banyan Ponzi and awaits sentencing. John W. Reaser, pleaded to an information charging him with conspiracy to sell unregistered securities and promote abusive trusts to evade taxes.

Co-defendant Terry W. Stewart became involved in varous groups which encourgage and assist individuals to evade taxes and other liabilities by "asset protection" schemes which involve hiding assets, income, and activities in sham or abusive trusts or other purported entities, but allow the owner to continue to control the income and assets.

In this capacity with Commonwealth, he entered a conspiracy with others in Banyan to provide PTOs to Banyan and Banyan investors. Banyan used these shams to evade scrutiny by the investor protection agencies, such as the Securities and Exchange Commission, and for the evasion of taxes by Banyan, the co-defendants, and some investors. Investors were falsely told that if they used the shams provided by Stewart, the profits from their investment with Banyan would not be subject to income taxes.

The defendants fraudulently induced over 500 individuals to invest over $56 million. These individuals were concentrated in the Southeastern United States, but included many missionaries and others located abroad. Many lost their life savings.