By Cathy Locke
clocke@sacbee.com
Three people have been sentenced in U.S. District Court for their part in a conspiracy to defraud the Internal Revenue Service.
U.S. District Judge Lawrence K. Karlton sentenced Wayne J. Majors, 56, of Phoenix to six months in a halfway house, and six months of home confinement as part of his five years of probation, according to a federal Department of Justice news release.
Also sentenced were Majors' two co-defendants. Leah Anderson, 37, of Phoenix, was sentenced to five years probation with 30 days intermittent confinement in jail and five months of home confinement. Sandra Villegas, 58, also of Phoenix, was sentenced to 30 days in jail followed by five months of home confinement.
The defendants pleaded guilty Aug. 28, 2009.
According to plea agreements, from 1999 through 2002, Majors and his wife, Leah Anderson, and his sister, Sandra Villegas, set up and managed a Sacramento law firm, the American Law Center, specializing in bankruptcy. The three operated the business side and hired lawyers for the legal work.
Majors hired Michael O'Neal to head the firm and paid him a set salary with an occasional bonus, according to the news release. O'Neal, who pleaded guilty to aiding and assisting in the filing of false tax returns in 2006, was listed as the owner and 100 percent stockholder of the firm on all required business filings.
Majors, however, was in actual control of the firm, including determining the attorneys' compensation and allocating the firm's profits, the news release says.
According to court documents, the American Law Center was profitable in 1999, 2000 and 2001. But Majors drained the profits out of the firm by making payments to shell companies that were owned and controlled by his wife and sister, American Law Inc., AMCI and Anderson Management Co. Much of the funds transferred into these companies between 1999 and 2001 went into Anderson's and Villegas' personal bank accounts and were used to pay the three defendants' personal expenses.
To maximize American Law Center's after-tax profits and to avoid paying individual income taxes on monies they received from the firm, Majors and Anderson falsified American Law Center's 1999 and 2000 corporate tax returns, resulting in no corporate income tax owing for either year, the news release said. The three defendants then avoided paying individual federal taxes by either filing no tax returns or filing false returns.
In 2001, the gross income of the American Law Center was accurately reported, but the defendants continued to list the substantial amounts paid to the shell companies as American Law Center's business expenses.
In imposing the sentence, the court took into consideration Majors' medical issues, concluding that a longer period of incarceration would be potentially dangerous to him and expensive to the U.S Bureau of Prisons, the news release said.
Call The Bee's Cathy Locke, (916) 321-5287.
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