Orland businessman sentenced to 18 years in tax scheme

by Meg Sullivan
staff reporter

The founder and executive director of the Aegis Company, a now defunct Palos Hills-based business firm accused of a $60 million nationwide tax fraud conspiracy, has been sentenced to more than 18 years in federal prison.

Michael A. Vallone, 49, of Orland Park, was sentenced Oct. 3 by U.S. District Judge Charles Norgle following an 11-week trial. Vallone had been convicted of tax fraud conspiracy in May.

Vallone was the first defendant sentenced in the case; five other defendants are now facing sentencing.

The Aegis Company marketed and sold trust packages to more than 650 wealthy clients throughout the United States.

Vallone and five co-defendants were convicted in May of participating in a nearly decade-long scheme to market and sell sham domestic and foreign trusts through a network of promoters, sub-promoters, managers, attorneys and accountants, according to Randall Samborn, spokesman for the northern district of the U.S. Attorney’s Office.

According to authorities, Vallone and others diverted income from businesses into sham trusts for clients, hiding hundreds of millions of dollars in income for those clients and resulting in a $60 million tax loss to the United States, making the case one of the largest of its kind.

The judge will rule later on the government’s request to seize from Vallone more than $4 million, his home and off-shore bank accounts and the costs of prosecution.

In addition to tax fraud conspiracy, Vallone was found guilty of and sentenced on 24 counts of aiding and assisting the filing of false tax returns, three counts personal income tax evasion, seven counts of mail fraud and two counts of wire fraud, Samborn said.

“There are numerous variations on abusive trust schemes, but in general, promoters say the trusts are designed to shift income and assets into vehicles that are either not subject to U.S. taxes or will make it impossible for authorities to trace,” Eileen Mayer, chief of the IRS Criminal Investigation Division, said in a statement.