A jury Friday found four members of a Lancaster County family guilty of tax evasion in federal court here.

Chester A. Bitterman Jr., Willow Street, and his sons, Craig L. Bitterman, Strasburg, C. Grant Bitterman, Willow Street, and Curtis L. Bitterman, Lancaster, were convicted of conspiracy to defraud the United States. Additionally, Craig Bitterman was found guilty of obstruction of justice.

The men are the father and brothers of Chester "Chet" Bitterman III, a missionary who was kidnapped and murdered in 1981 by Colombian guerrillas while on a trip with Wycliffe Bible Translators.

The three-week trial in Eastern District Court concluded Thursday afternoon, and the jury began its deliberations at 7 p.m. that day. They returned with their verdict at 4:30 p.m. Friday.

In finding the men guilty, the jury rejected defense assertions that the Bittermans were victims of an elaborate scam and sided with the prosecutors' claims they had concocted a "shell game" to avoid paying federal taxes.

The Bitterman family referred all questions to lead defense attorney Dennis Boyle, who is serving as spokesman for the family and the defense team. He said the verdict "is frustrating to me. They were wrapped up in something they didn't understand."

The jury's decision meant federal prosecutors proved that the men, partners in Bitterman Scale Co., Willow Street, illegally avoided paying federal taxes by transferring personal and business assets to trusts purchased from Commonwealth Trust Co., an organization that for 20 years marketed and sold trusts in the United States and Canada. The company claimed the trusts could be used to hide assets and lower tax burdens.

According to the U.S. Attorney's office, the IRS began investigating the Bittermans in 1998 and criminal investigators entered the case in 2004.

The federal government began investigating Commonwealth, based in Conroe, Texas, in 2003. That year, Terry Stewart, a Commonwealth Trust agent from Tennessee, was sentenced to 175 years in prison for operating a $56 million pyramid scheme.

Nine principals of Commonwealth have been convicted in the Eastern District of Pennsylvania.

In closing arguments Thursday, prosecutors and defense attorneys painted starkly different portraits of the four defendants.

In a 90-minute presentation, U.S. Department of Justice attorney Mike Vasiliadis exhibited invoices, tax forms, canceled checks, bank transactions and wire transfers to offshore accounts, personal letters, business records and recorded interviews and phone calls that were used as evidence in the three-week trial.

The recordings, said the attorney's office, were key components of the case, explaining, "We were able to play those recordings and the jury could hear the defendants in their own voices lying and concealing information."

That evidence, Vasiliadis said, proves that the defendants used aliases, offshore bank accounts and bogus paper transactions to hide their incomes and assets from the federal government.

"Each of these defendants meant to cheat the United States out of money and property, and keep the IRS from doing its job," Vasiliadis said. The Bittermans operated a "complicated shell game," he said. "The defendants agreed with each other to defraud the government."

He pointed to testimony from prosecution witnesses who said they had warned the Bittermans not to get involved in the Commonwealth scheme.

Yet, Vasiliadis said, "They continued to follow the CTC playbook. They repeatedly lied, they created falsehoods, they used their family members and friends in the community to hide their assets."

Craig Bitterman was convicted of obstructing justice because, the jury decided, after he received two subpoenas to appear before a grand jury in 2005, he shipped boxes of documents filled with records related to Bitterman Scale Co. and the family's numerous trusts to Texas and New Mexico to hide them.

Defense attorneys countered that the four men were unwitting dupes of Commonwealth, and agreed that the Bittmermans did "follow the CTC playbook."

Lead defense attorney Dennis Boyle, of Boyle, Neblett & Wenger, Camp Hill, representing Craig Bitterman, asked jury members to read the Commonwealth manual the defense entered as evidence.

"They were doing what it told them to do," he said.

"Now, in October 2010, we know CTC was a scam," Boyle said. "We know the principals are convicted felons. We know they played upon the fears of people. We know their products were complete frauds."

"But," he said, "things were much different 20 years ago."

Commonwealth , said Boyle, looked legitimate.

"They had a slick video and promotional materials. They quoted the Constitution and Supreme Court cases. They had lawyers and accountants who would tell people that pure trusts were protected by the Constitution. They had letters from the IRS stating a pure trust organization has no tax requirements. They had clients that included actors and former governors."

When Craig Bitterman purchased his first trust and contacted its Commonwealth trustees, Boyle said, "They knew they had a sucker. They convinced him to buy more trusts at thousands of dollars apiece. The Bittermans lost $100,000 of their own money in the scam."

All four defense attorneys attacked the testimony of Wayne Rebuck, a one-time minister who rose to the position of director of operations for Commonwealth and, as the federal government closed in, began cooperating with investigators. His testimony helped convict John Michael "Red" Crim, who led Commonwealth Trust, and who was found guilty of conspiracy to defraud the IRS. Crim was sentenced to eight years in prison in January 2008.

Lancaster attorney Jeff Conrad, of Clymer, Musser, Brown & Conrad, representing Curtis Bitterman, told the jury in an impassioned closing, "CTC had been operating since 1988, sucking down thousands of Americans into a hole. When the IRS finds out about this, does the IRS shut it down? No!

"Then Rebuck realizes, 'I owe $16 million,' and goes to the IRS and says, 'I'll reach in the hole and bring these people up for you. I'll bring them in for you, and you knock time off my jail sentence and knock my restitution down,'" Conrad said.

"What happens? He gets [sentenced to] 14 months in jail and $50,000 in restitution," Conrad said.

"The thousands of people who got sucked into that hole didn't go in as criminals, but the federal government has decided that they are."

Noting that the IRS has placed liens against the Bittermans' properties, Conrad said, "They've already paid a price. Curtis has to face his family and tell them he lost everything they had."

Chester Bitterman was represented at the trial by Louis Petriello, of Petriello & Royal, Blue Ball, and Grant Bitterman was represented by Larry Becraft, a Huntsville, Ala., attorney who specializes in tax law.

Craig Bitterman now faces a maximum sentence of 15 years in prison, three years of unsupervised release and a $500,000 fine.

His three co-defendants face a maximum sentence of five years in prison, three years of unsupervised release and a $250,000 fine.

The U.S. Attorney's office said there may have been individuals who were duped by the Commonwealth scam, but the difference between them and the Bittermans was, "The other ones all got out. Sometimes it was a couple months, sometimes a year, but when the IRS contacted them, they got out.

"These guys were put on notice 12 years ago and they kept doing things until 2005."

Boyle, asked if the defense team planned to file an appeal, said, "We are not to the end of the case yet. I'm going to file post-trial motions and then see what happens at sentencing. We're going to do what we can to help these people."

The Bittermans, he said, are "surprised and unhappy, but they have a very strong religious faith. They believe this is part of God's will."

csmedley@lnpnews.com