DELRAY BEACH, Fla. (WSVN) – A Delray Beach man pleaded guilty Thursday to orchestrating a nearly decade-long scheme that promoted an illegal tax shelter, resulting in more than $37 million in tax losses to the IRS, according to the Department of Justice.
Stephen T. Mellinger III, a financial advisor and insurance salesman, admitted to conspiring with others since 2013 to help clients fraudulently reduce their taxes by claiming false deductions for “royalty payments.”
Prosecutors said the scheme involved clients transferring money to accounts controlled by Mellinger and his co-conspirators, who then sent the funds—minus a fee—back to the clients, disguising them as legitimate business expenses.
Mellinger and his co-conspirators helped clients claim over $106 million in false deductions, earning approximately $3 million in fees, according to the DOJ.
Prosecutors said that when authorities began investigating in 2016, Mellinger and a relative stole more than $2.1 million from affected clients, using some of the money to purchase a home in Delray Beach.
Mellinger faces up to eight years in prison when he is sentenced on Sept. 16.
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