A third executive of a US firm has been charged with conspiracy to defraud and tax evasion by diverting millions of dollars to an offshore account in Bermuda an then through a “sham” Bermuda company, according to federal prosecutors.

The former chief executive of Andover computer training company, Digital Consulting Inc, was charged with diverting more than $8.5 million in company proceeds to Bank of Bermuda.

George Schussel, 63, of Lynnfield Massachusetts, has been charged with conspiracy to defraud the US and two counts of tax evasion by the US attorney's office.

US Attorney Michael Sullivan and Joseph Galasso, special agent in charge of the US Internal Revenue Service, Criminal Investigation, are charging that Schussel, who is still a principal shareholder of Andover-based Digital Consulting, conspired with others between 1988 and 1998 to avoid paying taxes on Digital Consulting's profits.

The indictment handed down against Schussel also charges him for filing false and fraudulent corporate and individual income tax returns for 1995, by failing to report to the IRS accurate Digital Consulting revenue and income that he and his wife received.

If convicted, Schussel faces up to five years imprisonment and a $250,000 fine on each of the two counts.

Ronald Gomes, 61, of Andover, former president and partial owner of Digital Consulting, pleaded guilty and is awaiting sentencing on charges of tax evasion for failing to report to the IRS income that he received from sales that were generated by the company and diverted to the Bank of Bermuda.

Diane Reed, 53, of West Boxford, former controller of Digital Consulting, has also been charged with tax evasion for failing to report bonuses and other money that she received from Schussel. Reed is expected to plead guilty to those charges March 15, according to the US attorney's office.

Digital Consulting was set up in 1982 by Schussel to organise and conduct computer based training seminars, trade shows, and conferences for businesses in the computer industry.

According to the US Attorney's office, Digital Consulting generates its revenue from ticket sales to participants who attend the seminars, trade shows, and other events, as well as from the contracting and selling of booth space to vendors involved in the shows.

The indictment alleges that from January, 1988, through May 8, 1998, Schussel conspired to defraud the US by diverting over $8 million of the company's gross receipts to an account he controlled at the Bank of Bermuda.

It is alleged by the US Attorney that after the diverted funds cleared through the bank in Bermuda, Schussel then transferred the money to an account he controlled at Fidelity Investments.

The account in Bermuda was held in the name of Digital International Consulting, Ltd., a “sham corporation allegedly set up in Bermuda by Schussel” said a statement from the US Attorney's office “to facilitate the diversion of taxable income that he failed to report to the IRS”.

The statement alleges that all of the money diverted to Bermuda was unreported by Schussel in Digital Consulting's corporate tax returns. It is alleged that Schussel diverted over $8.5 million of the company's revenues to Bermuda during the course of the scheme.

And it goes on to say that the diversion of Digital Consulting profits to Bermuda ended in 1995, when Schussel wanted to sell the company and realised that he could not disclose the true value of the company and its ability to generate substantial income, without potential discovery of the tax evasion scheme.

In the fall of 1997, the IRS commenced an audit of Digital Consulting's 1995 corporate tax return. The indictment alleges that during the course of this audit, Schussel, along with others, caused false representations to be made to the revenue agent conducting the audit.

Specifically, the auditor was led to believe that all of the income generated by Digital Consulting in 1995 had been deposited at Northmark Bank.

The Attorney's statement said that when questions arose during the audit relating to certain checques that were identified as payments to Digital Consulting, the revenue agent was falsely told that those payments were made pursuant to a business contract that Digital Consulting maintained with Digital International Consulting for services rendered.

In fact, as the indictment alleges, Digital International Consulting provided no services to DCI and the contract was fraudulently created to give the false impression that Digital Consulting and Digital International Consulting were engaged in legitimate business dealings, said the Attorney's report. Based on the false representations that were made to the revenue agent, it is alleged that the audit was obstructed.