GOP Operative Charged with Tax Crimes
A key Colorado political operative linked to the GOP fundraising committee, Trailhead Group, LLC, faces federal tax charges in connection with an unrelated business deal.
Scott Shires was charged with three counts [PDF] of willfully failing to file corporate income tax for Octane International, Ltd., a fuel research and development firm, for the years 1999, 2000, and 2001 and three counts of aiding and abetting while serving as the company’s secretary-treasurer.
Shires is a busy guy. He manages the Senate Majority Fund, LLC, among dozens of other state and federal Republican political committees. In fact, his company, Campaign Compliance Center, describes itself as “government reporting and contribution experts”.
In a series of investigative news stories last week, Colorado Confidential reported on the cozy relationship of the Senate Majority Fund and the influential Trailhead Group LLC, the high profile Republican fundraising committee founded by Gov. Bill Owens and others. Unreported transactions totaling $100,000 between the two groups generated recent complaints to the Internal Revenue Service and Colorado Secretary of State – including an allegation of money laundering.
Now, Shires faces potentially more serious trouble in his role as a director of Octane International.
U.S. District Attorney Troy Eid, once a top aide to Gov. Owens, filed the charges against Shires on August 24. He faces sentencing of up to one year of imprisonment and/or $25,000 in fines, and one year of supervised release for each of the three counts.
According to court documents, Shires entered into a plea agreement with the understanding that he will testify against Octane International’s founder and president William Orr of Parker, Colo. Assistant US Attorney Patricia Davies indicated in court filings that she will not seek detention for Shires in return for his cooperation.
Octane International’s purpose was to research and develop an alternative gasoline additive as less polluting and more fuel-efficient. The firm’s product known as “vapor phase combustion” has since been alleged to be nothing more than an elaborate investment scam by a Denver federal grand jury.
Orr was indicted on May 18, 2006 on a total of 28 criminal counts including mail fraud, wire fraud, making false statements, tax evasion and failure to file tax returns.
According to an article on WebCPA:
Orr allegedly made a variety of untested claims regarding the additive, receiving nearly $560,000 from 43 investors between January 1998 and December 2004. He also successfully lobbied members of Congress and other employees of the federal government, obtaining a $3.6 million earmark to be used for further testing of the additive — $2 million of which was dispersed.
Orr’s indictment outlined an elaborate Ponzi-like scheme that was perpetrated on the private investors through newsletter briefings that falsely claimed corporations would provide significant dollars or partnerships to develop the additive product. Meanwhile, Orr would continue to seek additional financial support from previous investors and solicit new ones to continue the flow of revenue.
However, instead of investing the money into the firm’s research, Orr transferred nearly all of the investors’ money in the additive research project from Octane International’s checking account into his own personal bank account, according to the indictment. Allegedly, he used the money for personal expenses. Orr was also charged with back-dating the minutes of an Octane board of directors meeting to provide cover for the money transfers.
The indictment further alleges that the firm’s board of directors consisted of Orr and two close associates, one of whom was Shires, who were not elected by Octane’s shareholders. Shires was an original founding board member and long-time associate of Orr’s, according to the company’s Articles of Incorporation.
Denver defense attorney Nathan Chambers – best known as counsel to domestic terrorist Timothy McVeigh who was responsible for the bombing of the Oklahoma City federal office building in April 1995 – is representing Shires.
Chambers did not return a call for comment.
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