Contact theSOPAbout theSOPSupport theSOPWritersEditorsManaging Editors
theSOP logo
Published:November 26th, 2006 03:50 EST
Federal Court Blocks South Carolina Man's Alleged Tax Fraud Schemes

Federal Court Blocks South Carolina Man's Alleged Tax Fraud Schemes

By SOP newswire


WASHINGTON " A federal judge in Greenville, S.C., has permanently barred John Howard Alexander of Greenville from promoting several tax-fraud schemes, the Justice Department announced today. The civil injunction order, to which Alexander consented, bars him from promoting schemes that promise tax benefits based on statements to customers that U.S. citizens are not subject to tax, that residents of South Carolina are not required to file federal tax returns while working in the United States, and that customers can escape tax by revoking or rescinding their Social Security numbers. District Judge Henry F. Floyd of the U.S. District Court for the District of South Carolina signed the order.

The government complaint in the case alleged that Alexander and his ex-wife, Heather Ferguson, operated a business in Greenville promoting the so-called 861 Argument. " Named after the section of the Internal Revenue Code that it misinterprets, the 861 Argument is a frivolous position that courts across the country repeatedly have rejected. The court permanently barred Ferguson last July. That injunction required Ferguson to notify her and Alexander`s customers of the injunction, and Ferguson provided a list of the customers to the Justice Department. More information can be found at

According to the government complaint, Alexander also sold sham-trust packages to customers for as much as $2,495 and helped customers hide their income from the IRS using offshore sham trusts. The complaint said that the IRS estimated the loss to the U.S. Treasury from Alexander`s schemes might exceed $48 million. The IRS lists misuse of trusts on its Dirty Dozen " list of most notorious tax scams. A list of the IRS Dirty Dozen tax schemes can be found at,,id=154293,00.html. The injunction bars Alexander from making false or fraudulent statements in connection with selling trusts or other arrangements, and bars him from obstructing IRS investigations.

Since 2001, the Justice Department has obtained more than 200 injunctions to stop the promotion of tax fraud schemes or the preparation of fraudulent returns, including the promotion of sham-trust tax-fraud schemes and the frivolous Section 861 " argument. Information about these cases is available at Information about the Justice Department`s Tax Division can be found at