An Orem man who was accused by the U.S. Justice Department of promoting bogus tax scams that cost the U.S. Treasury more than $135 million and siphoning $20 million from investors nationwide, was sentenced to 30 months prison for tax evasion, federal regulators announced Friday.

Roderick Prescott, a former principal of National Trust Services in San Jose, Calif., and Selma, Ore., pleaded guilty in June to evading at least $550,000 in personal income taxes for 1998 and 1999, according to the Justice Department and the Internal Revenue Service.

Chief U.S. District Judge Ann Aiken, in a sentencing hearing Thursday in federal court in Eugene, Ore., ordered that restitution be calculated by the IRS in a civil proceeding. According to court minutes, both parties are to provide guidance to the Probation Office regarding restrictions on Prescott's employment.

According to the government's trial brief, Prescott and his former business partner, Leroy Fritts (now deceased) earned about $3.5 million from their nationwide promotion and sales of phony trust schemes through National Trust. They also earned income from recruiting National Trust clients to invest in Fountainhead Global Trust, a Ponzi scheme that collected about $20 million in investors' funds from 1995 through 1999.

The government, in a sentencing memorandum filed last week, had asked that Prescott be ordered to make restitution totaling $1.43 million to the IRS and be sentenced to 46 months in prison and three years of supervised release.

But Prescott's lawyers asked for a sentence of 12 months imprisonment by home detention and 36 months of supervised release, blaming Fritts as the "mastermind who exerted complete control over the trusts and bank accounts," and who left Prescott to deal with "irate investors, chaotic finances and general confusion."

Fountainhead Global, a purported offshore investment that promised returns as high as 50 percent a year, transferred part of the $20 million to an account at the Bank of Bermuda in the Cayman Islands, to be invested in high-interest debt through a Florida entity called Cash 4 Titles, according to the government.

Typically, these promoters would charge customers several thousand dollars each to set up trusts and transfer the customers' property into the trusts.

The bogus trusts were then used to illegally claim tax deductions for personal expenses such as home maintenance costs, and to avoid reporting and paying income taxes, the government said.

Prescott and Fritts then funneled part of the money in the trust accounts back to themselves and took large sums of investors' funds without sending the money offshore.

The men spent the investors' funds on luxury goods and real estate including a $2.97 million ranch near Grants Pass, Ore., $328,060 on solar panels for the ranch, $1.12 million on frozen food "in anticipation of a year 2000 apocalypse," two custom-built luxury log homes, $82,308 on two BMW automobiles, a Lincoln Town Car and Lincoln Navigator automobiles for a total of $39,000, a diamond ring for $11,313, a piano for $36,000, a mobile home for $91,900 and a motor home for $301,945.

Eventually the scheme broke down and a vast majority of investors lost their entire investment.

Prescott and Fritts also used the purported trusts and numerous offshore bank accounts, as well as false taxpayer identification numbers and offshore credit cards under fake names to conceal their income from the IRS.

According to the government's trial brief, despite making significant income from NTS and FGT, neither Prescott nor Fritts filed any individual federal income tax returns for 1998 or 1999. Prescott last filed a tax return in 1991.

In June 2003, a federal court in San Diego permanently barred Prescott and his business, Trust Educational Services, from selling trust schemes falsely claiming that personal expenses incurred by customers could be paid through a trust in order to obtain tax benefits not available to individuals.

Prescott agreed to the court order and was required to give the Justice Department records showing the names of customers who attended his workshops or used his "trust system." According to papers filed by the Justice Department in the case, Prescott's bogus trusts encouraged purchasers to under report their income and claim improper deductions on their tax returns, resulting in an estimated $135 million revenue loss to the U.S. Treasury.

Acting Assistant Attorney General John A. DiCicco commended the IRS-Criminal Investigation special agents who investigated the case, as well as Tax Division trial attorneys Jay Nanavati and Timothy Stockwell who prosecuted the case.