Confessions of a Tax Scammer
Dec. 10, 2004 — -- Federal officials say an undercover investigation by "20/20" helped expose one of the country's leading tax scammers, Jerome Schneider, who was sentenced Monday to six months in prison.
The original "20/20" report that aired in 1997 revealed how Schneider, through books and seminars, promised wealthy Americans a clever and legal way to help them keep their money from the Internal Revenue Service.
The IRS conducted its own investigation and concluded that Schneider's key scheme -- involving offshore banks -- was pure tax fraud. Schneider and his lawyer, Eric Wittmeyer, were eventually indicted by a federal grand jury in California on wire and mail fraud charges, as well as on conspiracy to defraud the IRS. In February, both men pleaded guilty to the conspiracy charge and agreed to cooperate with the government.
In fact, the U.S. District Court judge handling Schneider's case told him he could receive a reduced prison sentence if he went back on "20/20" and detailed his offenses. Schneider originally faced up to five years in prison for his crimes.
"Basically, shortly after '20/20' aired the piece, it was a chain of events that just led to my complete destruction," a visibly aged and well-worn Schneider, 53, told ABC News last month. "My world's fallen apart."
Wealthy businessmen, doctors, lawyers, celebrities and others paid big money to listen to Schneider's advice, either at seminars or in private consultations. His area of expertise was a special kind of offshore bank. Under this scheme, an American taxpayer could set up his own individual bank in a distant island locale where his money could be safely hidden. Schneider touted this as a legal tax haven. But the IRS disagreed. Because the taxpayer would keep control of the offshore money, the IRS concluded that the scheme was illegal under U.S. laws.
Seven years ago, when Schneider was confronted with the undercover footage ABC News had shot while attending one of his tax seminars in Cancun, Mexico, he walked out. At the time, Schneider said he was "absolutely not" helping people to evade paying taxes.
