Boulder City woman involved in $31 million tax scam

By Jean Reid Norman

Wednesday, July 1, 2009 | 1:59 a.m.

A Boulder City woman who served four years in prison in connection with an investment scheme in 1989 has been banned from doing foreign tax returns for a tax shelter scam that was recently halted.

Lynn Lakers prepared tax returns for clients of Reinhold Sommerstedt, who, according to federal court documents, advised investors to set up foreign trusts. He then helped them funnel the money back into the United States.

A federal judge last week ordered Sommerstedt to stop operating the trusts. Justice Department attorneys estimated that the scam cost the U.S. Treasury $31 million in tax revenue.

The case was filed in 2006 against Sommerstedt, Lakers, Daniel Young of Las Vegas and Stephen Nestor of Boise, Idaho.

Shortly after that filing, Lakers agreed to a federal order to stop doing tax returns for Sommerstedt’s clients, her attorney George Kelesis said.

Lakers did not know about the part of the scam where clients were able to get their money out of the foreign trusts that Sommerstedt set up, Kelesis said.

“On paper, everything looked great. It was the way they were managing the funds,” he said. “Lynn had no part in that. She had no idea what was going on.”

Lakers in 1989 pleaded no contest to a single count of embezzling $778,000 from investors -- many of them senior citizens -- in a computer investment plan that went sour. She was sentenced to eight years in prison and served four.

She now operates a business consulting firm called Living Stones, which she said does work only by referral and not in Boulder City. The company continues to prepare domestic tax returns, she said.

After she was released from prison, Lakers said, she was hired in the state unemployment office, where she worked for several years. She moved to Boulder City to care for her aging parents, she said.

In the 1989 case, Lakers had set up a business to lease computer equipment to businesses. When the leasing business did not work out as planned, she used new investment money to pay back old investors, according to news accounts at the time.

In the old case, she said, “It was never our intent not to pay people. I had a Chapter 11 bankruptcy plan in place at the time I went to prison. ... If the plan had been left alone, people would have been paid back a long time ago.

“You can’t make any payment plan work if you’re in prison.”

She said she cooperated with federal prosecutors in the recent case.