Federal Jury Convicts Four Tax Shelter Promoters in $40 Million Scheme
A federal jury in the District of Colorado has found four individuals guilty of orchestrating a nationwide abusive trust tax evasion scheme that caused approximately $40 million in losses to the United States Treasury. The verdict, returned in June 2026, is one of the largest abusive tax shelter prosecutions in recent memory — and it carries an unmistakable message from the DOJ's National Fraud Enforcement Division: sham trust structures sold as legal tax-reduction strategies are criminal enterprises, and the professionals who design, market, and administer them will face federal prosecution.
The four defendants — Marcia Predmore, Roderick Prescott, Suzanne Thompson, and Weldon Wulstein — marketed an illegal "layered" trust tax shelter to hundreds of high-net-worth business owners across the country. One of the defendants had already been federally convicted of tax evasion and was under a permanent court injunction prohibiting him from promoting abusive tax shelters when he joined this scheme anyway. The jury convicted all four. None has yet been sentenced.
If you are a business owner who purchased a trust-based shelter promising to eliminate taxes on 90% or more of your income, or if you are currently under IRS examination for trust-related deductions, this verdict has direct implications for your exposure. The time to engage experienced criminal tax defense counsel is before IRS Criminal Investigation knocks on your door.
Who Are the Defendants?
Marcia Predmore is a registered life insurance agent who promoted the tax shelter through a business she operated with her spouse. Her husband, Timothy McPhee, was sentenced in December 2025 to 151 months in federal prison for conspiracy, tax evasion, and wire fraud — charges stemming from his role in the same scheme and from his separate operation of a multi-million-dollar investment fraud called the ROI Cash Flow Fund. Predmore herself used the very tax shelter she sold to clients, which produced six personal federal tax evasion convictions in addition to the conspiracy count. The image this creates for the jury is devastating: a promoter who believed so little in the legitimacy of her own product that she secretly knew it was fraudulent — and used it anyway.
Roderick Prescott is the most remarkable defendant in this case from a legal standpoint. Before joining this scheme, Prescott had already been convicted of federal tax evasion and was under a permanent federal injunction that specifically barred him from promoting abusive tax shelters. He promoted this scheme anyway — focusing specifically on the "private family foundation" layer, a structure that allowed clients to claim a charitable tax deduction while secretly retaining personal control over the donated funds. The deliberateness required to continue a scheme you have already been federally convicted and permanently enjoined from operating leaves no room for any willfulness defense.
Suzanne Thompson operated a bookkeeping firm and prepared financial statements for clients' trust structures. Working in close partnership with Wulstein, she was convicted of six counts of aiding and assisting in the preparation of false tax returns under 26 U.S.C. § 7206(2) in addition to the conspiracy charge. Her role gave the scheme its documentation layer — the financial records that made the sham trust transactions appear, on paper, to be legitimate business activity.
Weldon Wulstein, a certified public accountant, prepared hundreds of false federal income tax returns for clients who purchased and used the layered trust shelter. A licensed CPA preparing the returns — while a bookkeeper handled the underlying trust records — gave the scheme an air of professional legitimacy that prosecutors and IRS Criminal Investigation methodically dismantled during a full jury trial. Wulstein was also convicted of six counts of § 7206(2) in addition to the conspiracy charge.
The Scheme: How a "Layered Trust" Becomes a Federal Crime
The defendants marketed what they called a "layered" trust tax shelter consisting of four interconnected structures: a business trust, a family trust, a charitable trust, and a private family foundation. Clients were told they could use this four-layer architecture to eliminate taxes on up to 98% of their business profits — a number that should have been an immediate red flag for any attorney, CPA, or financial advisor who reviewed it. No legitimate tax planning strategy produces results anywhere near that figure.
The mechanics of the fraud worked like this: business income was routed through the layered trust structure via transactions characterized, on paper, as deductible business expenses or charitable contributions. In reality, the trusts were sham entities — they had no independent economic substance, no genuine arm's-length beneficiaries, and no legitimate business purpose other than generating false deductions on federal returns. Clients were told they could "own nothing, control everything." That marketing phrase perfectly encapsulates the fraud: the trusts were structured to appear to transfer ownership of assets while the client retained full beneficial control — which is not a tax strategy, it is a criminal concealment.
The shelter cost between $25,000 and $50,000 to set up, which the defendants collected in addition to ongoing bookkeeping and return preparation fees. For clients, the appearance of eliminating taxes on hundreds of thousands of dollars in annual business income made the initial fee seem trivial. For the defendants, selling the same fraudulent product to hundreds of clients created a revenue stream that was insulated from any single client being caught — at least until IRS-CI opened a full investigation.
The jury heard evidence that the defendants were repeatedly warned — by attorneys, CPAs, financial professionals, and published IRS guidance — that this type of layered trust shelter was illegal. They continued operating the scheme despite those warnings. That documented pattern of ignoring professional counsel is directly relevant to proof of willfulness — the mental state required under 26 U.S.C. § 7201 (tax evasion), 26 U.S.C. § 7206(2) (aiding false returns), and the intent element of the conspiracy charge. It also eliminates any realistic reliance-on-counsel defense, since the professional advisors the defendants consulted told them the scheme was illegal.
The Charges and Statutory Framework
Understanding the legal structure of this prosecution requires understanding how federal law treats tax shelter promoters separately from the clients who purchase their products:
- Klein conspiracy to defraud the United States (18 U.S.C. § 371): All four defendants were convicted on this count. A "Klein conspiracy" — named for United States v. Klein, 247 F.2d 908 (2d Cir. 1957) — does not require proof that any specific return contained a false statement. It requires proof of an agreement to obstruct or impede the IRS in the lawful assessment and collection of taxes. The practical breadth of this charge is enormous: it sweeps in every aspect of the scheme, every client, every year, and every step taken to maintain the fraud. Maximum penalty: 5 years in prison per count.
- Aiding and assisting in the preparation of false tax returns (26 U.S.C. § 7206(2)): Thompson and Wulstein were each convicted of six counts. Section 7206(2) is the primary statutory tool used against return preparers and shelter promoters who participate in filing false returns without personally signing them. The statute applies to any person who aids, assists, procures, or advises the preparation of a false or fraudulent return — regardless of whether they are the taxpayer of record. Maximum penalty: 3 years per count, meaning each faces up to 18 additional years of exposure on top of the conspiracy count.
- Tax evasion (26 U.S.C. § 7201): Predmore alone was convicted of six personal tax evasion counts for using the same layered trust shelter she sold to clients. Section 7201 requires proof of three elements: (1) an unpaid tax deficiency, (2) an affirmative act of evasion, and (3) willfulness. Predmore's personal use of the fraudulent shelter she designed and marketed makes her willfulness virtually unchallengeable — she built the scheme, she understood it was designed to evade taxes, and she used it herself. Maximum penalty: 5 years per count, meaning Predmore faces the highest potential sentencing exposure of the four defendants.
All four defendants now await sentencing. Presentence Investigation Reports must be completed by the U.S. Probation Office, and any post-trial motions must be resolved, before sentencing hearings are scheduled. For Prescott in particular, the U.S. Sentencing Guidelines provide for substantial upward adjustments for prior criminal conduct and breach of a court order — factors that could push his Guidelines range well above what a first-time offender in an identical case would face.
Analysis: The Badges of Fraud in This Prosecution
Criminal tax defense attorneys and IRS Special Agents both recognize a set of factual patterns — "badges of fraud" — that distinguish criminal tax evasion from civil negligence or honest error. The Predmore/Prescott prosecution is a comprehensive checklist:
- Implausible tax results: Eliminating 98% of business income through deductions is not aggressive tax planning — it is a claim so facially implausible that it demonstrates knowledge of fraud. No genuine business expense or charitable contribution pattern produces results like that without criminal manipulation of the underlying transactions.
- Sham entities with no economic substance: The four layered trusts had no purpose other than generating false deductions. The IRS's economic substance doctrine and the step-transaction doctrine both collapse these structures into what they actually are: conduits for moving money while creating paper trails that falsely suggest deductibility.
- Concealment of beneficial ownership: The "own nothing, control everything" marketing language is a direct admission that the scheme was designed to disguise the economic reality of the client's relationship to their assets — which is the essence of tax concealment.
- Continuing despite professional warnings: The trial record establishes that attorneys and CPAs warned these defendants the scheme was illegal. Continued operation after receiving those warnings is among the strongest possible evidence of willfulness.
- Prior conviction and injunction (Prescott): There is no legal or factual argument available to a defendant who violates a permanent federal injunction prohibiting the exact conduct for which he is now on trial. Prescott's prior history transforms his conduct from criminal to egregious.
- Scale and organizational sophistication: A network spanning hundreds of clients, multiple states, and years of operation — with distinct roles for promoters, bookkeepers, and return preparers — reflects a sophisticated criminal enterprise, not a good-faith tax planning practice that crossed a legal line.
What Shelter Clients Must Do Right Now
The convictions of the four promoters do not end the exposure for the hundreds of business owners who purchased and used this shelter. IRS Criminal Investigation's Denver Field Office has confirmed it is continuing to investigate the scheme, and shelter clients remain potential subjects of civil examination or criminal referral. The government now has trial exhibits, witness testimony, client lists, and promotional materials — all of which can be used to identify and contact every client who used the product.
For clients who have not yet heard from the IRS, the IRS Voluntary Disclosure Practice represents the most significant risk-mitigation tool available. The VDP allows taxpayers who willfully failed to report income — including through use of a fraudulent shelter — to come forward, correct their returns, pay the taxes owed with interest and penalties, and potentially avoid criminal prosecution. The critical legal requirement is timeliness: the disclosure must be made before the IRS has already opened a criminal investigation targeting that specific taxpayer, or before the IRS obtains information about the taxpayer's noncompliance from a third party.
For clients who have already received an IRS audit notice or civil examination related to their trust deductions, the immediate priority is engaging a criminal tax defense attorney — not just a CPA — before responding to the examining agent. A civil examination that reveals badges of fraud can result in a criminal referral to IRS Criminal Investigation, and statements or documents produced during the civil examination are admissible in a subsequent criminal case. This is the eggshell audit scenario: every word spoken to a revenue agent, every document produced in response to an Information Document Request, must be managed with awareness of the criminal exposure that lurks behind the civil proceeding.
If you have received an IRS target letter identifying you as a subject of a criminal tax investigation, or if an IRS Special Agent has contacted you, the voluntary disclosure window is almost certainly closed. At that stage, the priority shifts to defense strategy, evidence preservation, and early engagement with the DOJ Tax Division about potential plea or cooperation.
Contact Brightside Tax Relief — Confidential Criminal Tax Counsel
The Predmore/Prescott prosecution illustrates every dimension of federal criminal tax enforcement against abusive shelter schemes: jury trials, conspiracy charges that sweep in every participant, § 7206(2) charges against preparers, personal § 7201 evasion charges for promoters who used their own product, and an investigation that continues long after the promoters are convicted.
Whether you are a former client of this specific shelter, a participant in any other trust-based or abusive tax arrangement, or a professional who participated in preparing returns for shelter clients — Brightside Tax Relief's criminal tax defense team provides the confidential, privilege-protected counsel you need. We serve clients in Colorado and nationwide, including clients navigating the specific enforcement environment of the District of Colorado and IRS-CI's Denver Field Office.
⚠️ If you are under investigation or have received any contact from IRS Criminal Investigation, contact Brightside Tax Relief immediately for a confidential consultation. Do not speak to federal agents or IRS Special Agents without experienced criminal tax defense counsel present. Call 914-214-9127 or visit brightsidetaxrelief.com/criminal-tax-defense.
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