Two KC-area attorneys charged in multimillion dollar tax schemes

KANSAS CITY, Mo. (AP) -- Two Kansas City-area attorneys have been accused of helping their clients avoid millions of dollars in income tax payments through fraudulent tax schemes.

In lawsuits filed Wednesday in federal court in Kansas City and disclosed Thursday, the Justice Department asked a judge to permanently ban A. Blair Stover Jr., of Platte City, and Allen R. Davison, of Overland Park, Kan., from providing tax advice or representing clients before the Internal Revenue Service.

Stover and Davison didn't immediately return phone calls Thursday for comment.

The suits claim both men worked with wealthy clients to avoid most or all of their tax liability by setting up sham corporations based in Nevada. Those corporations would receive payments for bogus management services to the clients' companies, which were then claimed as tax deductions. Other bogus corporations distributed the management fees as stock to the customers' Roth Individual Retirement Accounts, which are not taxable.

One of Stover's clients, the lawsuit alleges, used the Roth IRA scheme for four years and avoided reporting or paying taxes on more than $57.6 million in income, saving the client more than $20 million.

Prosecutors also allege that Davison helped his clients claim deductions tied to operating chicken farms even though one client, who claimed $1.25 million in deductions over three years, told the IRS he had never been a farmer.

Davison allegedly recommended other clients claim tax credits for making their businesses more accessible to the handicapped although they never spent any money on the improvements.

In all cases, the prosecutors allege, Stover and Davison told clients the schemes were legal.

The lawsuits claim Stover and Davison worked together and began promoting aggressive tax schemes in the mid-1990s. They no longer work together but have clients across the country, prosecutors said, estimating in the lawsuit that the attorneys' alleged actions have led to tax losses "in the hundreds of millions of dollars."