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LAS VEGAS--A federal jury in Las Vegas, Nevada has convicted anti-tax crusader Irwin Schiff and two associates of aiding and assisting in the preparation of false income tax returns filed by other taxpayers in connection with a tax scam.
Schiff, 77, and co-defendant Cynthia Neun, 52, were also found guilty of conspiring to defraud the United States, the Department of Justice and the Internal Revenue Service.
Another co-defendant, Lawrence Cohen, 65, was acquitted of three counts of aiding in the filing of fraudulent tax returns and conspiracy but was found guilty of one count. He faces up to three years in prison and a $250,000 fine.
Schiff was found guilty of all 13 federal charges against him including income tax evasion, conspiracy and the filing of false tax returns for the years 1997 through 2002, was led from the court in handcuffs, ordered held without bail until his sentencing in January.
Neun was convicted of 15 of the 16 counts she had been charged with including willfully failing to file federal income tax returns, Social Security disability fraud, and theft of government property in connection with Neun's improper receipt of Social Security disability benefits.
Schiff faces up to 43 years in prison and up to $3.25 million in fines plus sanctions for outbursts during the trial. He represented himself during the five-week trial.
Neun, who was represented by counsel, faces up to 50 years in federal prison and $3.3 million in fines after being found guilty of conspiracy, tax evasion, aiding in the filing of fraudulent tax returns, Social Security disability fraud and theft of government property.
It is expected that both will appeal the convictions. Neun's attorney said that Schiff and Neun should have been tried at separate trials and said that the trial was "fraught" with legal errors.
Presiding judge Kent Dawson who ordered Schiff held without bail said that he was "unmanageable" during the trial and specifically noted that Schiff had stated that judges are corrupt.
According to the indictment, the government charged that beginning in 1995, the defendants directed thousands of taxpayers to file false federal income tax returns with the IRS that reported zero taxable income in spite of the taxpayers earning large amounts of reportable income. It was alleged that Schiff and Neun operated the scam through Freedom Books, a business owned by Schiff, that sold books, tapes, and packets encouraging customers not to pay income tax.
The U.S. Department of Justice said that according to a government witness who testified at trial, between 1997 and 2002 Freedom Books sold more than $4.2 million in products that promoted Schiff's "anti-tax" scheme.
"People who evade their tax obligations, or encourage or enable others to do so, are cheating all law-abiding taxpayers," said Eileen J. O'Connor, assistant attorney general for the Justice Department's Tax Division. "The Department of Justice will prosecute these crimes, and juries will convict the offenders."
The Justice Department filed a civil suit in the same court against Schiff, Neun, and Cohen in March 2003, and the court granted a temporary restraining order barring them from advertising or selling Schiff's "zero-income tax return" plan; preparing tax returns for others; and assisting others to violate the tax law, including by "selling services, books or other materials that provide direction about how to fill out fraudulent or false tax forms. . . ." The preliminary injunction was affirmed after the defendants' appeal to the U.S. Court of Appeals for the Ninth Circuit.
The U.S. Supreme Court this month declined to hear Schiff's challenge to the Ninth Circuit decision. The Justice Department will ask the district court to convert the preliminary injunction into a permanent one. More information about the injunction may be found on the Tax Division website at http://www.usdoj.gov/tax/txdv03357.htm and http://www.usdoj.gov/tax/txdv03167.htm.
The evidence presented at trial also proved that Schiff evaded the payment of more than $2 million in taxes he owed the IRS from 1979 through 1985. Schiff concealed income he earned from Freedom Books, in part by using offshore bank accounts and conducting financial transactions through secret "warehouse" banking services. The evidence also showed that Schiff used debit cards issued by offshore banks to obtain funds he transferred offshore, that he opened bank accounts using multiple tax identification numbers, and that he titled his ownership of a car in the name of a Pennsylvania corporation.
This marks the third time Schiff has been convicted of tax offenses. "Paying taxes is the price of citizenship. After three strikes, I would hope that even Schiff realizes that he has struck out," said IRS Commissioner Mark W. Everson. Schiff was convicted in 1980 of two counts of failure to file income tax returns and in 1985 of three counts of tax evasion and one of failure to file. He has served a total of four years in federal prison.
Schiff's argument was that the federal tax code doesn't require taxpayers to pay income tax and disputes the government's definition of income. He also contends that the IRS has no authority to seize property.
The jury, comprised of seven women and five men, deliberated for three days before reaching their verdict.
Earlier this year, a former IRS agent, Joseph Barrister of San Jose, CA., was acquitted on charges that he defrauded the government in relation to the filing of income taxes. A jury in U.S. District Court in Sacramento acquitted him on a charge of conspiracy to defraud the government and three counts of aiding and assisting the filing of false tax returns for a client as a certified public accountant.
Barrister says that the 16th Amendment which gives Congress the "power to lay and collect taxes on incomes", was never properly ratified and so individuals don't need to file federal income tax returns.
10-25-05
© 2005 North
Country Gazette
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