Setting up the LLC is not illegal. On its own, this is not tax evasion.

The tax evasion comes in when you fail to pay the use tax due and make false declarations or intentionally omit information when you make representations to the government (i.e. in tax filings).

The individual in question could have set up a Montana LLC, purchased a vehicle through it, paid the use tax due when he moved it to Tennessee and changed the registration within the 30 day limit.

Of course, there is no benefit of going out of your way to buy a car in Montana if you don't intend to drive it there, but the charges against this person relate to his failure to pay tax, not the mere fact that he set up an LLC.