Texas man pleads guilty in $43 million IRS tax shelter fraud scheme

A Texas man has pleaded guilty to participating in a large-scale tax fraud scheme that resulted in an estimated $43 million loss to the Internal Revenue Service, according to the U.S. Department of Justice. Larry C. Conner, 69, of Frisco, Texas, admitted to conspiring to defraud the IRS through a fraudulent tax shelter scheme that spanned from February 2018 to September 2023. The scheme involved promoting an abusive trust tax shelter to clients across the country, with Conner conducting in-person seminars under the name of The Business Solutions Group. Court documents obtained by the Justice Department reveal that Conner orchestrated a complex financial arrangement designed to route nearly all of a taxpayer's income through three so-called "non-grantor" trusts and a private family foundation. This structure was intended to circumvent standard tax obligations, allowing participants to avoid paying taxes on their income. Conner typically charged clients between $25,000 and $50,000 for these arrangements, which were marketed as legal tools to reduce taxable income. Conner admitted during his plea that he was fully aware of the fraudulent nature of the scheme. He acknowledged receiving repeated warnings from attorneys and accountants regarding the illegality of such structures, as well as having access to IRS publications that explicitly condemned abusive trust tax shelters. Additionally, he confessed to personally utilizing the scheme from 2016 to 2021 to evade taxes on approximately $5.2 million of his own earnings. The scheme involved multiple co-conspirators who played key roles in its execution. Among them were Timothy McPhee and Marcia Predmore, a Colorado couple who had already pleaded guilty to related charges. McPhee is currently serving a 151-month prison sentence following his conviction. Predmore, along with Nevada-certified public accountant Weldon Wulstein and Wyoming-based bookkeeper Suzanne Thompson, was found guilty by a jury in a five-week trial that concluded in May and June 2026. They face sentencing in January 2027. Roderick Prescott, a resident of Mesquite, Nevada, is also part of the group facing similar charges. Arizona-based tax preparer Kent Ellsworth pleaded guilty to two counts of aiding and abetting the preparation of materially false and fraudulent tax returns. His sentencing is pending in the District of Arizona on December 7. Conner himself pleaded guilty to conspiracy to defraud the United States and is set for sentencing on January 26, 2027. He could receive up to five years in prison, though the final decision rests with a federal district court judge who will consider sentencing guidelines and other relevant factors. The case was handled by the Justice Department’s National Fraud Enforcement Division, with Assistant Attorney General Colin McDonald overseeing the proceedings. The IRS Criminal Investigation division led the investigation, while the prosecution was carried out by Lauren K. Pope and Amanda R. Scott, former members of the Criminal Division’s Tax Section.