In a case the IRS says highlights the risks of offshore tax shelters, a prominent Kerrville chiropractor pleaded guilty Thursday in Austin to three misdemeanor charges of failing to file tax returns.

No date was set for sentencing David G. Williams, who faces up to a year in prison under the plea agreement and must pay $1.64 million in taxes owed in 1999, 2000 and 2001, court documents show.

If accepted by U.S. District Judge Lee Yeakel, the deal will resolve four felony tax-evasion charges originally faced by Williams, who's been called “America's No. 1 expert in natural healing” and “the Indiana Jones of natural medicine.”

A 2008 indictment accused Williams of scheming with Kapok Management, a U.S. Virgin Islands firm, to evade paying taxes on more than $11.5 million in revenue generated between 1999 and 2003 by his businesses, including an alternative health care newsletter.

It says Williams executed sham transactions that included payment of bogus management fees to Kapok to create the appearance that he was eligible for a tax break of up to 90 percent through an economic development program offered in the Virgin Islands.

IRS Special Agent Mike Lemoine said the indictment shows that “taxpayers place their liberty at great risk when they engage in illegal offshore transactions designed to evade income taxes.”

Defense attorney Chad Muller said he plans to request probation for Williams, noting that four Kapok executives were acquitted at trial in March in the Virgin Islands of tax evasion, conspiracy and fraud charges.

“You've got a Kerrville chiropractor being prosecuted for a tax shelter that these accountants put together and were acquitted on,” he said. “There are people all over the United States that were involved in this shelter and are now facing civil or criminal review by the IRS.”

Full story