A brick mason who also ran an Orem video arcade game company was placed on three years' probation Friday in connection with what federal prosecutors say was an illegal tax shelter scheme.
As part of a plea bargain, Stephen Fullmer had pleaded guilty in March to one count of making a false statement to the government.He admitted telling an IRS official that in 1983 his company, Video Enterprises of Orem, owned 130 to 140 video arcade games with a total cost of $273,000 to $700,000, when in fact the company had only 23 games costing approximately $11,000.
Fullmer was one of three men originally indicted in connection with the tax shelter. After he made his bargain with prosecutors, they filed a superseding indictment naming only the other two - Gregory Bloom and Emmett King. Bloom and King are to stand trial July 10 on charges of conspiracy, false statements, aiding and abetting and preparation of false returns.
According to the indictment, Bloom and King, both accountants, agreed with Fullmer and his partner, Joseph Peterson, to raise money for Video Enterprises of Orem by means of a tax shelter.
Bloom originally was to supply California investors who needed a tax shelter, but he failed to do so and Peterson and Fullmer ended up recruiting their relatives and friends, the indictment says.
According to the indictment, Bloom and King would prepare tax returns for the investors claiming investment tax credits for their purported investments in the Orem video company. The amounts claimed would be whatever the investors needed to obtain a refund of the income taxes they'd paid in the previous three years, the indictment says.
The government says the investors actually would make only a 6 percent to 7 percent cash down payment on their investments, paying the rest by signing promissory notes. And, by backdating the notes, the investors didn't even have to make the down payments until they'd received their first income tax refunds under the scheme, the indictment says.