FOR IMMEDIATE RELEASE TAX

TUESDAY, JANUARY 23, 2007 (202) 514-2007

WWW.USDOJ.GOV TDD (202) 514-1888

Lead Promoter and Two Former

Attorneys Sentenced to Prison
for Role in Tax and Investment Fraud
Scheme
WASHINGTON – David J. Orr and former attorneys, Todd Cannon and Michael
Behunin, were sentenced in federal court in Salt Lake City, Utah, in connection
with the promotion of a tax and investment fraud scheme, the Justice Department
and Internal Revenue Service (IRS) announced today. U.S. District Judge Ted
Stewart sentenced Orr to 60 months in prison, Behunin to 29 months in prison, and
Cannon to 36 months in prison. In addition, all three defendants were ordered to
serve three years of supervised release upon the completion of their terms of
imprisonment. Cannon was also ordered to pay more than $1.2 million in restitution.

In April 2003, Orr, Cannon, Behunin, Lanny White, who pleaded guilty on
November 27, 2006, and certified public accountant Max Lloyd were indicted for
promoting and selling a fraudulent trust scheme to over 300 clients that defrauded
the United States of millions of dollars in tax revenue. All three defendants pleaded
guilty to a felony charge of conspiracy to defraud the United States and to commit
mail and wire fraud, in connection with the promotion of the tax and investment
fraud scheme. In total, 11 individuals, including four attorneys and one certified
public accountant, have pleaded guilty in this case.

“Tax professionals who help others commit tax evasion pay a steep price for their
crimes,” stated Eileen J. O’Connor, Assistant Attorney General for the Justice
Department’s Tax Division. “They forfeit not only the privilege of their professional
livelihood, but also their liberty when they are sentenced to lengthy prison terms.”

According to papers filed with the court, Orr was the lead promoter, salesperson and
organizer for the fraud scheme. Orr admitted that his actions cost the federal
Treasury between $5 million and $10 million in lost tax revenue. Orr also admitted
that he obtained between $5 million and $7 million from clients by misrepresenting
his investment experience and the safety and expected return on the investments he
marketed.
“Concealing income from the government through the use of fraudulent trust
arrangements is not financial planning; it’s criminal activity,” said John H. Imhoff,
Jr., Acting Chief, IRS Criminal Investigation. “Those who promote these activities
will be held accountable.”

Orem, Utah, attorney Todd Cannon was legal counsel for the fraud scheme and
falsely represented to clients that the trust scheme was legal. Cannon admitted that
his actions cost the federal Treasury almost $3 million in lost tax revenue. Cannon
also admitted that he allowed his fellow conspirators to fraudulently use and invest
over $1 million of clients’ funds for purposes other than those promised to the
clients. As a condition of his guilty plea, Cannon agreed to surrender his law
license.

Sandy, Utah attorney Michael Behunin prepared numerous false tax returns for the
fraud scheme, costing the federal Treasury between $950,000 and $1.5 million in
lost tax revenue. Behunin also admitted to participating in a fraudulent railroad bond
investment scheme, causing clients to lose between $350,000 and $450,000. As a
condition of his guilty plea, Behunin agreed to surrender his law license. Behunin
also holds an advanced degree in taxation.

The case was prosecuted by Tax Division trial attorney Nicholas D. Dickinson.
Special agents of the Internal Revenue Service and FBI assisted with the
investigation and prosecution of this case.

###

07-036