The United States Attorney's Office for the Northern District of California and the IRS-Criminal Investigation Division announced that Edward R. Peck, of Prescott, Arizona, formerly of Santa Rosa, California was arrested yesterday following his recent indictment for alleged income tax violations.  Mr. Peck was indicted March 16, 2004, by a federal grand jury in San Francisco for seven counts of making and subscribing to false returns or other documents in violation of Title 26, United States Code, Section 7206(1).   

According to the indictment, Mr. Peck is alleged to have willfully and knowingly filed individual income tax returns for the years 1998, 1999, and 2000 claiming fictitious losses in the respective amounts of $550,501; $4,702; and $99,987 from an entity known as Surfwood Venture.  Defendant Peck is also alleged to have falsely reported to the IRS that he had no interest in or signature or other authority over a financial account in a foreign country.

Also according to the indictment, Mr. Peck is alleged to have willfully and knowingly filed U. S. Partnership returns for the years 1998, 1999, and 2000 claiming fictitious losses in the respective amounts of $579,475; $4,950; and $105,250.

Finally, the indictment charges that Mr. Peck filed a false Application of Tentative Refund (Form 1045) for the calendar year 1998 with the IRS.  This document, as is true of all tax returns, was signed under penalty of perjury and was false in that it claimed carryback net operating deductions of $225,809 for 1996 and $427,540 for 1997.  Defendant Peck is alleged to have known that no net operating losses existed and that there were no decreases in his taxes for 1996 and 1997.

The maximum statutory penalty for each violation of Title 26, U.S.C., § 7206(1) is three years in prison; one year supervised release; a fine of $250,000, plus costs of prosecution.  However, any sentence following conviction would be dictated by the Federal Sentencing Guidelines, which take into account a number of factors, and would be imposed in the discretion of the Court.  An indictment simply contains allegations against an individual and, as with all defendants, Mr. Peck must be presumed innocent unless and until convicted.

IRS Special Agents arrested Mr. Peck at his home in Prescott, Arizona, yesterday morning.  Mr. Peck made an appearance in federal court in Phoenix today before a United States Magistrate Judge.  The court ordered Mr. Peck to turn over his passport after which he would be released on a $200,000 appearance bond.  He was also directed not to have any contact with organizers or members of Anderson Ark & Associates (AAA), an organization that used off-shore entities and bank accounts to illegally avoid paying taxes.  The defendant is scheduled to appear before United States Magistrate Judge Larson in the Northern District of California on April 7, 2004.

The prosecution of Mr. Peck is the result of a lengthy investigation by the IRS, Criminal Investigation Division (CID).  Thomas Moore is the Assistant U.S. Attorney who is prosecuting the cases with the assistance of legal technician Kathy Tat.