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July 23, 2015

Four Pa. family members sentenced on tax fraud charges

U.S. Attorney's Office says Lancaster County family used offshore accounts, fake trusts to conceal assets

IRS Fraud
02162015_tax_forms_AP Mark Duncan/AP

The Ohio Department of Taxation forms and information on fighting identity theft and income tax fraud forms are displayed, Friday, Feb. 13, 2015, in Cleveland.

Four family members accused of using fake trusts, hiding money in offshore accounts and understating their assets to avoid paying taxes were recently sentenced in federal court, according to a statement released Thursday by the U.S. Attorney's Office.

Members of the Lancaster County-based Bitterman family ran the Bitterman Scale Co., which was used “to conceal their income and assets from the IRS," prosecutors said. "The Bittermans used aliases, offshore bank accounts and a complex series of sham paper transactions to disguise the income."

The defendants , Chester A. Bitterman Jr., 81, and his sons, Craig L. Bitterman, 55; C. Grant Bitterman, 53; and Curtis L. Bitterman, 61, were convicted in 2010 on charges of conspiracy to defraud the United States.

The oldest defendant, Chester Bitterman, received three years probation but was not given prison time because of his advance age and having an ailing spouse. The other three received prison sentences ranging from 21 months to three years.

“The defendants transferred their personal and business assets to sham trusts. … The trusts were used to make it appear as though the defendants had little or no assets or income,” U.S. Attorney Zane David Memeger said. “In reality, the defendants retained complete access and control over their funds.”

Before they were sentenced, the four defendants paid a total of $437,000 in restitution to the IRS.