It turns out William S. Reed’s “bulletproof” plan to help clients conceal assets in Nevada corporations wasn’t made of Kevlar, after all.

Authorities contend his scam was constructed of pulp paper and Internet illusion, and for starters cost consumers nearly $19 million, all while using Nevada’s loose laws of incorporation as a personal shill.

Reed, Richard Neiswonger and Wendell Waite were indicted last week on federal charges of defrauding the federal government, mail fraud, wire fraud, conspiracy and money laundering in connection with an IRS criminal investigation into the activities of a company called Asset Protection Group.

The IRS investigation was assisted by the group’s prolific Internet promotion and the publication of Reed’s own book, “Bulletproof Asset Protection.”

With variations on a fraudulent theme that trace to 1998, APG promised participants in its Nevada incorporation program that they would be virtually free from showing asset ownership, revealing profits or paying taxes.

In addition, Reed & Co. “endorsed, marketed, and profited from a scheme” that also helped participants “disguise corporate ownership services with associated bank accounts,” place “friendly liens” to encumber businesses and sell the fraudulent “business opportunities” to the public.

Reed himself created more than 2,550 companies.

Participants paid up to $10,000 apiece. Reed, a part-time Las Vegan, became the sole signatory on 619 accounts at Nevada First Bank that processed $63 million in anonymous deposits. He sent another $11 million into offshore accounts, according to the indictment.

That’s not to mention the $152 million in fraudulent “friendly encumbrances” he helped generate.

In all, the IRS and U.S. attorney’s office allege Reed and his friends owe more than $13 million in taxes while APG’s clients are good for another $14 million.

Nevada’s incorporation laws have long been considered among the most liberal in the country, but the state’s promoters have countered most criticism by posturing that even the slightest strengthening of those statutes would be bad for business creation.

Bad, as opposed to being known nationally as a corporate safe harbor for rip-off artists, tax cheats and shady dealers.

In June 2006, the intergovernmental Financial Action Task Force produced a voluminous study that singled out Nevada, Delaware and Wyoming as case studies of states whose flimsy corporate statutes made investigating money laundering, income tax fraud and other cases extremely challenging.

Nevada’s laws essentially provided a welcome mat for business owners seeking anonymity.

Perhaps out of a sense of embarrassment, and with some members of Congress calling for national reform, Nevada officials responded with legislation in 2007 that cinched up some of the loopholes.

“We have become the second most popular filing jurisdiction behind only Delaware because we are very business friendly,” Secretary of State Ross Miller says. “However, with that successful promotion of a business friendly atmosphere, we have definitely attracted some bad actors. We’ve tried to be aggressive to weed out the bad actors.”

Let’s see if we can spot the bad actors in the Reed case. His company left little to the imagination, promising customers concealment from all authorities, even under oath in a courtroom.

APG advertisements touted, “Use a Tax Savings Nevada Corporation to: … sidestep taxes … move your personal income to multiple Nevada Corporations owned by separate extended family members to take advantage of the lower corporate tax rates on the first $50,000 of any corporate income.”

Another pitch: “Don’t wait until you’re the defendant in a lawsuit or the target of an IRS investigation to consider protecting your assets.

“Better to have your assets where the IRS can never seize them or know about them.

“What a judge can’t find, he can’t seize. And, when asked about your assets, you want to be able to say, ‘I don’t have any assets,’ not ‘I’ve got assets — but you can’t get them.’ ”

And there’s: “Who Should Have a Tax Savings Nevada Corporation? The obvious answer is anyone whose combined business and personal taxes are cutting deeply into income. If you look at the money and think, ‘I could do so much more with that than they will,’ you need a Tax Savings Nevada Corporation.

“Block the IRS from levying your wages or seizing your property.

“Dispose of cash so it’s positively untraceable, yet immediately available.”

Those who bought APG’s Nevada pitch and package not only paid thousands for misleading information, but they set themselves up for criminal investigation.

After reading those and many other sales pitches, and given the state’s long and mostly shabby history of corporate governance, who can really blame them for being confused about whether Nevada businesses were subject to federal tax law, or, for that matter, whether the Silver State was even one of the official 50?

At the risk of being labeled as being bad for business, which of these is worse:

■ Scammers who pimp Nevada’s easy corporate statutes for millions of dollars?

■ Or the state’s long tradition of inaction that has helped to facilitate the tawdry transactions?

John L. Smith’s column appears Sunday, Tuesday, Wednesday and Friday.