Former IRS District Director Pleads Guilty To $1.3 Million Tax Fraud

No one is above the law – not even an employee of the Internal Revenue Service based in Vista, California. A former Internal Revenue Service (IRS) district director pleaded guilty recently to conspiring to defraud the government through his involvement in a tax fraud scheme promoted by “Renaissance, The Tax People, Inc.” During a hearing before a U.S. District judge, Jesse Ayala Cota admitted defrauding the government of more than $1.3 million and to earning more than $300,000 from his participation in the scheme.

This is an example of someone implying he has “insider information” to help others enrich themselves by buying into his bogus tax avoidance system. However, what he sold was long-term legal and financial problems for those who bought his advice.

Renaissance used Cota’s credentials as a former district director for the IRS to lend the tax fraud scheme legitimacy and to induce people to join and to remain members.

Cota admitted that during his participation in the conspiracy, those involved prepared or had others prepare false federal income tax returns resulting in a tax loss of approximately $1.3 million. Cota also admitted that from 1997 though April 2002, the conspirators, through Renaissance, operated a scheme to defraud the government and individuals by marketing a program to sell illegal tax deductions through false and misleading representations.

Cota also admitted that he and his co-conspirators falsely assured their clients and others that Renaissance’s tax system was legal. Cota acknowledged that a co-conspirator sent an e-mail message to customers falsely asserting that there existed written endorsements from “over 2,000 tax attorneys, enrolled agents and certified public accountants that every strategy contained in the Tax Relief System is absolutely sound, unassailable and proven over the past 40 years.” The e-mail also falsely claimed that “the training offered by Renaissance, the Tax People, through the Tax Relief System . . . was approved for continuing education credit for CPAs in all 50 states.”

Cota faces a potential maximum sentence of five years in prison followed by up to three years of supervised release, a $250,000 fine, and liability for the costs of prosecution. Sentencing is scheduled for January 2008.

For civil tax problems, rather than criminal tax controversies, call Mitchell A. Port at 310.559.5259.