A superseding indictment this week claimed the professionals, Craig Fenton, and CPAs Kevin McDonnell, James Richardson, owners of McDonnell Richardson, P.C., were handpicked by attorney, Joseph Garza of Dallas, who promoted the illegal shelter, which the Department of Justice says caused a $200-million tax loss. Fenton is a tax manager at the firm and McDonnell is also reportedly a licensed attorney.
The indictment of Garza on October 18 says from about 2012 to 2021 hepromoted a tax shelter that allowed high-income clients to claim bogus tax deductions. He and the co-conspirators allegedly told clients to transfer funds into shell companies, which was then returned untaxed to clients.
The group then allegedly concealed the circular flow of funds by commissioning fictitious business valuation reports, creating invoices for fake business expenses, and drafting sham contracts.
McDonnell, Richardson and Fenton are accused of aiding the fraud by filing phony tax returns for clients and the shell companies.
All four have been indicted on charges of wire fraud, conspiracy to commit wire fraud, helping clients file false tax returns, and conspiracy to defraud the United States.
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