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Mercer Island resident sentenced in fraud case
Mercer Island resident Jeffrey I. Greenstein, 48, was sentenced in U.S. District Court in Seattle on Jan. 28 to 50 months in prison and two years of supervised release for conspiracy to defraud the United States, and aiding and assisting with the filing of a false tax return.
Greenstein, the former CEO of Quellos Group, L.L.C., and former Quellos tax attorney Charles H. Wilk, 52, of Seattle, pleaded guilty last September.
Both men paid the IRS $7 million in penalties related to their personal gain realized from the design, promotion and implementation of a fraudulent tax shelter they called POINT, or portfolio optimized investment transaction.
Beginning in 1999 and continuing until 2006, the two men represented POINT to wealthy taxpayers who anticipated large capital gains. POINT was designed to offset those gains, by mixing the gains with losses from publicly traded technology companies that had depreciated in value.
But the losses were for stocks that never existed. It was a scam involving more than $9.6 billion in phony stock sales.
There was no offshore investment fund, and no shares of stock were actually purchased and possessed by any offshore investment fund.
IRS agent Daniel Wardlaw told the Reporter that the estimated $240 million tax loss from the scheme has all been paid back.
Greenstein’s former address is 9772 S.E. 35th Place on Mercer Island.