Justice Department Sues Nevada Man to Stop Alleged Tax Fraud Scheme

WASHINGTON – The United States has sued David Champion of Pahrump, Nev., seeking to bar him from promoting an alleged tax fraud scheme designed to assist his customers evade paying federal taxes, the Justice Department announced today.

According to the civil injunction complaint filed in Los Angeles federal court, Champion promotes a tax fraud scheme based on the frivolous claim that U.S. citizens can choose to opt out of federal income taxation by declaring themselves to be "non-taxpayers." The lawsuit alleges that Champion, who previously resided in Los Angeles, helps customers evade federal taxes by setting up sham "pure trusts" to which they transfer their businesses and personal assets.

The government further alleges that Champion falsely tells his customers that their purported trusts need not file income tax returns or pay taxes. According to the complaint, Champion himself has an unpaid federal tax liability exceeding $800,000.

Champion’s misconduct, the government alleges, has led to civil and criminal penalties against his customers. The complaint states that Internal Revenue Service inquiries concerning eight of Champion’s customers revealed that he had assisted them in evading payment of approximately $1.4 million in income taxes.

In the past decade, the Justice Department’s Tax Division has obtained hundreds of injunctions to stop tax fraud promoters and tax return preparers. Information about these cases is available on the Justice Department website.