Two Cheyenne residents and a Sedona, Arizona woman have been convicted in federal court on conspiracy to commit fraud and obstructing a grand jury in connection with scheme to avoid paying federal income taxes.

Investigators say Joseph Hill, 56 and Lucille Kathleen Hill (aka Kathy Hill) 58 of Cheyenne and 68 year old Gloria Reeder of Sedona, Arizona had not file income tax returns for years. In the case of the Hills a return hadn't been filed since 1994, and Reeder hadn't  filed since 1985.

They were also convicted of using a phony trust scam which they told customers would reduce or eliminate tax debt to the federal government.

The Hills operated a business known as Creative Consulting Group (CCG)  which sold  sham trust to supposedly help people avoid taxes, The phony trusts were assigned income by using a bank account that was opened with a false federal tax identification number. The trusts were used to hide income and assets from the IRS..

Gloria Reeder and Kathy Hill  also used phony liens on property to keep the IRS from seizing the property for back taxes.

Joe Hill and Reeder also obstructed a grand jury investigation by convincing clients to withhold documents from a grand jury investigation,. The Hills earned almost $500, 000 by selling the phony trusts between 2007 and 2012. Reeder earned almost $400, 000 from insurance commissions and a travel business over the same period. No federal taxes were paid on any of that income.

The trio were convicted on Thursday, May 28. Chief U.S. District Judge Nancy Freudenthal has set an August 6th sentencing date for the trio. They could each receive up to five years in prison and a $250,000 fine. Joe Hill and Reeder could also get up to 20 years in prison and a $250,000 fine for obstructing the grand jury investigation,

Three other people--Lawrence Paille, Amanda Campbell and Stephanie Maciel--had already pleaded guilty to conspiracy charges for using the phony trusts to avoid paying taxes on a total of $2.7 million.

Each of them testified at the Hill/Reeder for the prosecution at the Hill/Reeder trial.