Dallas attorney arrested for fraud in $1 billion tax shelter scheme
DALLAS (CBSDFW.COM) — A Dallas attorney was arrested and charged with multiple counts of fraud for his alleged role in a $1 billion tax shelter scheme, authorities announced Thursday.
Joseph Garza, 79, was arrested at his home on Oct. 25, 2022 after he was indicted on numerous counts for his role in the scheme, which involved creating shell companies and falsely reporting expenses to the IRS in order to dodge taxes.
He faces 18 counts of wire fraud, one count of conspiracy to commit wire fraud, and 22 counts of aiding and assisting in the preparation of fraudulent income tax returns.
According to the indictment, Garza created shell companies that would purport to provide services to clients' businesses or serve as investment vehicles. In reality, they had no legitimate purpose and served only to move money around.
Garza and his coconspirators even went as far as creating fake operating agreements, service agreements, invoices, and private annuity agreements in order to give the shell companies a veneer of legitimacy in order to hide the scheme from the IRS.
The scheme also involved preparing and filing fraudulent tax returns. Garza and others involved in the scheme would falsely deduct expenses for services that were never performed, create receipts for payments not earned, deduct payments from the investment company for annuities that did not exist, and underreport their clients' individual incomes.
Law enforcement officials allege that Garza charged his clients a percentage of the money they chose to shelter from taxes. The scheme allegedly resulted in over $1 billion in unreported income and over $200 million in unpaid taxes.
"This attorney allegedly hid more than a billion dollars of client income from the IRS, conning the US Treasure out of roughly $200 million and lining his own pockets in the process," said US Attorney Chad Meacham.
If he is convicted, Garza faces up to 20 years in prison for each of the 18 counts of wire fraud, 20 years for the conspiracy count, and three years for each of the 22 counts of filing false tax returns.
The investigation is ongoing.
