U.S. sues LV man accused of scheme for hiding assets

The federal government filed a lawsuit on Monday, seeking an injunction against a Las Vegas man accused of operating a scheme that helps taxpayers hide assets from the Internal Revenue Service and other creditors.

The Justice Department asked a federal judge in St. Louis to stop William S. Reed of Las Vegas from continuing the alleged scheme to cheat the IRS.

The lawsuit provides ammunition to critics who claim that Nevada incorporation laws make it easier to evade federal income taxes to launder money and potentially to finance terrorism.

"Reed's scheme is grounded in his assertion that Nevada law does not require disclosure of the true owners of a corporation," according to the lawsuit filed by Michael Roessner, a Justice Department attorney.

Reed is identified as the founder of the now defunct Asset Protection Group. Reed is a lawyer who was suspended from practicing law in Colorado because of alleged misrepresentations and dishonesty. He is accused of setting up a scheme to conceal the assets of clients seeking to avoid paying income taxes.

In the book "Bulletproof Asset Protection," Reed wrote: "Camouflaging your assets is the first step in implementing any asset protection plan. Remember, if a federal judge can find an asset, he can seize it."

Reed also promoted the business through a video called "The Litigation Explosion," which featured actor Robert Wagner.

Attempts to reach Reed failed. His attorney did not return a call for comment.

Reed and Richard Neiswonger, who served 12 months in prison for wire fraud and money laundering, created Asset Protection Group in 1998 in Las Vegas. The company acted as a registered agent for 3,200 corporations, helping them incorporate in Nevada.

Asset Protection Group trained people to become asset protection consultants, who sold asset protection services to clients who wanted to hide assets.

Reed would advise clients to allow him to establish Nevada corporations that listed Reed as the only officer and director, which is legal in Nevada although Reed would be only a nominee or "straw man" for real officers and directors. The lawsuit claims that customers could hide bank accounts by having Reed be the sole person signing on the account.

The federal government has identified 75 Asset Protection Group customers who used the "hidden bank accounts" to evade income taxes.

Shares in the corporation were not issued to anyone by name but were so-called "bearer shares," which belong to whomever holds the share certificates.

The government said Reed advised customers not to tell Reed what the customers intend to do with the share certificates. "What I don't know, I can't tell anyone," Reed explained.

The Nevada Legislature earlier this year outlawed bearer shares.

Reed also advised clients who were sole owners of corporations to arrange for the filing of false liens against real estate.

The customer gave the corporation a short-term mortgage loan or so-called deed of trust. The loan was secured by real estate.

The false liens gave legitimate creditors the wrong impression that the Asset Protection Group client had little or no equity in the real estate, according to the lawsuit.

The complaint outlines six sham liens for a total $2 million that were designed to protect customers owing $900,000 in federal income tax.

The lawsuit seeks a court order stopping Reed from continuing to operate an asset protection business, noting that one of his employees violated an earlier federal court order in a separate Federal Trade Commission lawsuit.