Colorado man sentenced to 12.5 years in prison for promoting an abusive tax shelter and operating a multi-million-dollar investment fraud scheme

Date: Dec. 16, 2025

Contact: newsroom@ci.irs.gov

DENVER – A Colorado man was sentenced today to 12.5 years in federal prison for promoting an abusive tax shelter, using the tax shelter to commit tax evasion, and operating a fraudulent investment scheme.

According to court documents and other statements made in court, from 2018 through 2023, Timothy McPhee of Estes Park, Colorado promoted a fraudulent tax shelter to taxpayers across the country. The tax shelter was made up of three trusts called a business trust, family trust, and charitable trust, and a private family foundation. McPhee taught clients who purchased the tax shelter how to use the trusts and foundation to evade paying federal income taxes on nearly all of their income.

Among other directions, McPhee instructed clients to assign nearly all of their business income to the trusts and to file false tax returns that made it seem as if that income belonged to the trusts, not the client. He also told clients to spend the money in the trust bank accounts on their own personal expenses and to fraudulently claim those expenses as deductions on the trust tax returns. As a result, clients who used the tax shelter paid taxes on only about 2% of their income. But because the clients funded the trust bank accounts with their income, controlled the money in the accounts, and benefitted from the trust funds, the income funneled to the trusts was taxable to the clients themselves. In pleading guilty, McPhee acknowledged that he deliberately ignored warnings from accountants and attorneys that the tax shelter was fraudulent and illegal and that he nevertheless gave directions to clients that he knew directly contradicted IRS guidance.

In total, use of the tax shelter caused a loss to the United States of about $45 million in unpaid federal income taxes.

McPhee also personally used the tax shelter to conceal from the IRS more than $5 million in income earned from 2016 through 2021. As a result, McPhee did not pay roughly $1.8 million in federal income taxes he owed those years.

From January 2023 through May 2024, McPhee also operated and promoted a fraudulent investment scheme called the ROI Cash Flow Fund. McPhee promoted the ROI Cash Flow Fund as an opportunity for investors to earn a 3% monthly return on a principal investment. He falsely told investors that the ROI Cash Flow Fund would generate monthly returns by sending the investors’ funds to a third-party borrower who would engage in foreign exchange currency or “forex” trading. In total, based on McPhee’s false representations, investors sent more than $8 million to bank accounts he controlled.

In reality, however, McPhee did not send the investors’ funds to a borrower as promised. Instead, he used investor funds to make monthly 3% payouts to investors. He also spent investor funds on his own personal expenses and investments, including sending more than $2 million in investor funds to a bank account he held in the name of one of his trusts. In total, the ROI Cash Flow Fund scheme caused a loss to investors of about $6 million.

“Our goal is not just to enforce the law, but to protect honest taxpayers from being misled by promotors who profit from deception. Mr. McPhee stole more than just money from his victims. He stole their trust, their piece of mind and their future,” said Amanda Prestegard, Special Agent in Charge, IRS-CI Denver Field Office. “We are proud to partner with DOJ’s Criminal Division and the FBI and appreciate the message the judge sent by handing down this very impactful sentence.”

IRS Criminal Investigation and FBI investigated the case.

Trial Attorney Lauren K. Pope and Former Trial Attorney Amanda R. Scott of the Criminal Division Tax Section prosecuted the case.

“IRS Criminal Investigation special agents and our law enforcement partners will continue investigating and forwarding for prosecution, individuals like Dantavious Jackson, who defrauded American taxpayers at a time when businesses needed funds to help keep employees on their payrolls,” said Special Agent in Charge Demetrius Hardeman, IRS Criminal Investigation, Atlanta Field Office. “During FY25, IRS Criminal Investigation initiated 588 investigations involving more than $5.6 billion of potentially fraudulent Employee Retention Credits related to tax years 2020, 2021, 2022, 2023, and 2024.”

This case was investigated by IRS Criminal Investigation and prosecuted by Assistant U.S. Attorney George J.C. Jacobs, III.

IRS Criminal Investigation (IRS-CI) is the law enforcement arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money laundering, public corruption, healthcare fraud, identity theft and more. IRS-CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a 90% federal conviction rate. The agency has 19 field offices located across the U.S. and 14 attaché posts abroad.