An Estes Park businessman who promoted an elaborate tax avoidance scheme has pleaded guilty to conspiracy, tax evasion, and wire fraud in a case that spans multiple years and involves roughly $45 million in unpaid federal taxes.
Timothy McPhee admitted to operating an illegal tax shelter from 2018 to 2023, consisting of a private family foundation and three trusts that helped clients — and himself — hide millions from the IRS. In a separate scheme that ran from January 2023 through May 2024, he also defrauded investors through a Ponzi-like operation he called the “ROI Cash Flow Fund.”
From Tax Seminars to Criminal Charges
The tax scheme wasn’t exactly subtle. McPhee and his associate Larry Conner promoted their strategy at hotel seminars across Colorado and Texas starting in 2017, drawing in business owners with promises of near-total tax avoidance.
During his guilty plea, McPhee acknowledged that he “gave directions to clients that he knew directly contradicted IRS guidance” and “deliberately ignored warnings from accountants and attorneys that the tax shelter was fraudulent and illegal.”
How did the scheme work? Clients were instructed to assign business income to a series of sham trusts and a supposed “private family foundation,” creating the illusion that income belonged to these entities rather than the actual earners. The indictment detailed how this elaborate shell game allowed clients to pay personal expenses through these trusts while avoiding income tax obligations.
McPhee didn’t just sell the scheme — he used it himself, concealing over $5 million in personal income between 2016 and 2021, which allowed him to evade approximately $1.8 million in federal income taxes.
From Tax Fraud to Ponzi Scheme
Apparently not satisfied with one fraudulent operation, McPhee launched another. While already under investigation for tax fraud, he created what authorities describe as a classic investment scam.
His “ROI Cash Flow Fund” promised investors a too-good-to-be-true 3% monthly return, supposedly generated through foreign exchange currency trading. In reality, the operation functioned as a Ponzi scheme, with new investor funds used to pay earlier investors and finance McPhee’s personal expenses.
The investment fraud pulled in more than $8 million from unsuspecting investors. Of that amount, investigators discovered that over $2 million was diverted to a trust account held by McPhee for his personal use.
A Widening Investigation
McPhee isn’t the only one facing consequences. Four co-conspirators were indicted for their roles in promoting and implementing the tax shelter while helping prepare false tax returns. The case has expanded since initial charges were filed, with Acting Deputy Assistant Attorney General Karen E. Kelly of the Justice Department’s Tax Division announcing the latest developments.
The FBI and IRS Criminal Investigation division are conducting ongoing investigations, with Trial Attorneys Lauren K. Pope and Amanda R. Scott prosecuting the case.
McPhee faces sentencing on October 23, 2025. The maximum penalties are steep: five years each for conspiracy to defraud the United States and tax evasion, plus 20 years for wire fraud. “A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors,” according to court documents.
While the case involves complex financial maneuvers, the lesson is surprisingly simple: when someone offers you a way to pay virtually no taxes on your business income, perhaps the proper response isn’t “Where do I sign?” but “When does the jail term begin?”
