Military-techno writer Dale Brown pleaded guilty Monday to filing a false 1998 income tax return with more than $440,000 in fraudulent expenses as part of an offshore tax evasion scheme, federal prosecutors said.
Brown, 47, who lives at Lake Tahoe, is the author of 13 New York Times best sellers, including "Flight of the Old Dog," "Fatal Terrain" and "Warrior Class."
He deducted the fictitious expenses for research and marketing expenses in a company in the West Indies and an insurance policy with a company in Grenada as part of a scheme promoted by Terry Neal of Gresham, Ore., author of the book "The Offshore Advantage" and a high-profile advocate of offshore asset protection strategies, federal prosecutors said.
Neal earlier pleaded guilty to conspiring to defraud the United States as part of the scheme that has been under investigation by the U.S. Justice Department and Internal Revenue Service in Oregon and Nevada since 2002, officials for the IRS in Las Vegas said in a statement late Monday.
Brown of Incline Village pleaded guilty to filing the fraudulent return in U.S. District Court in Portland, Ore., and is scheduled to be sentenced there on Aug. 9 before Judge Ancer L. Haggerty, said Mercedes Manzur, IRS special agent in Las Vegas.
He faces a maximum penalty of up to three years in prison and a $250,000 fine.
U.S. Attorney Karin Immergut of Oregon and Erick Martinez, special agent in charge of IRS criminal investigations in Nevada, said Brown admitted the 1998 tax return for his "S" corporation contained deductions for fictitious services performed by Original Concepts Ltd. of Nevis, West Indies.
Brown created the company for the purpose of receiving money for fictitious research, marketing and contracted services, prosecutors said. The deducted expenses for those services totaled $341,975, in addition to $106,314 Brown deducted for the insurance policy from another company in Grenada, they said.
Among other things, he used the scheme to help pay for remodeling expenses for a new residence, federal officials said.
Brown's home telephone number is not listed and he could not be immediately reached for comment by The Associated Press Monday night. Manzur said late Monday night from Las Vegas that the name of Brown's attorney was not immediately available.
Brown and Neal created a false document intended to justify Brown's foreign bank credit card when an IRS revenue agent contacted them in October 2002, federal officials said.
Brown submitted the false document and made a sworn statement concerning the false document to the revenue agent, they said.
"Taxpayers must beware of tax evasion schemes designed to conceal taxable income because the taxpayers are ultimately responsible for all the information on their tax returns," Martinez said in a statement Monday.
"IRS Criminal Investigation is committed to investigating promoters of these schemes and clients of these abusive schemes," he said.