United States v. Smith

FACTS AND PROCEDURAL HISTORY

The government brought Smith and Bates1 to trial for 1 Smith and Bates were tried as co-defendants with another alleged par- ticipant in the conspiracy, Charlotte Wadsworth. Wadsworth was acquitted by the jury. 13076 UNITED STATES v. SMITH enlisting hundreds of clients to set up trusts known as Unin- corporated Business Organizations, or “UBOs,” which pur- portedly avoided taxes on income streamed into them; the defendants charged their clients to set up and conduct transac- tions for the UBOs, only to later steal their clients’ money.

The defendants advised their clients to transfer all of their income and assets — including their businesses, homes, rela- tive’s homes, furniture, jewelry, cars, and even pets — into the UBO. Defendants also advised clients to ask their employ- ers to issue pay checks, commission checks, or other income sources in the names of their UBOs instead of in their names.

Moreover, the defendants assured clients that they could use the UBOs to pay a variety of expenses, to be deducted as “business expenses” from the UBO’s income. These business expenses included everything from mortgage and utility pay-…