The Seeno family accumulated an Internal Revenue Service tax debt of more than $500 million stemming from its use of an outlawed tax shelter strategy, a former business partner and executive allege.
After the feds alerted the family of the bill, Seeno accountants began directing staff to concoct phony tax reporting to show the family's debts exceeded their assets and to curry favor with the IRS in hope of a good settlement, said Brad Mamer, the former CEO of the Seenos' Nevada development group, who was tasked with many of those projects.
Mamer claims in his lawsuit against the Seenos, which he recently amended, that the projects may have broken federal tax and banking laws and may be associated with the February 2010 raid of the family's Concord headquarters by the IRS and other federal investigators.
The former president and CEO said he spoke to both the IRS and FBI, among other enforcement agencies, and believes they all are investigating the Seenos.
Sam Singer, the Seenos' spokesman, said Mamer's tax allegations are false, and are an attempt by the former Wingfield Nevada Group CEO to "save his own skin." He declined to comment on specifics about any Seeno tax issues or a possible settlement.
Mamer first sued the Seenos and other top executives last month, claiming they were involved in racketeering and had violated labor laws regarding his employment. He is asking for more than $3.3 million in his civil case.
Earlier this year, the Seenos sued their former business partner Harvey Whittemore, claiming he embezzled millions of dollars from their Nevada companies. The lawsuit led to felony charges against Whittemore for allegedly making illegal campaign contributions to U.S. Senate Majority Leader Harry Reid in 2007 and lying to the feds about them. He has pleaded not guilty to the four charges and is expected to go to trial next year.
The Seenos later added Mamer as a defendant, accusing him of breach of contract and civil conspiracy.
In a past tax year, the Seenos used a tax shelter strategy known as "SC2," offered by accounting giant KPMG.
This complicated tax strategy shifts wealthy investors' obligations from large tax liabilities to charities, or other tax-exempt organizations, to claim tax breaks.
The feds began coming after whatever tax benefits the Seenos and others got this way.
After its introduction in the early 1990s, the feds began investigating SC2, said Joel Hesch, a former Department of Justice Fraud Division attorney; on April 1, 2004, the IRS ruled it considered SC2 to be an abusive tax-avoidance transaction and would disallow any tax benefits from it.
Water Transmission Project
By January 2009, Mamer and other top Wingfield executives knew of the tax problems that affected co-owners Albert Seeno Jr. and his brother Thomas Seeno, along with each brother's families, Mamer said.
The next month, Whittemore claims, he was approached by the Seeno brothers.
"They needed (Whittemore's) assistance on their income tax obligations and that the IRS was seeking the payment of income taxes in an amount in excess of $500 million," Whittemore alleged in his Feb. 1 lawsuit against the family. "The Seenos represented to Whittemore that if he did not assist them with their tax problems, then all of the companies 'would go down.'"
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