Taxable Talk

Yesterday I wrote about Dr. Frederick Kriemelmeyer, a dentist in LaCrosse, Wisconsin. Dr. Kriemelmeyer was found guilty today of three counts of filing false tax returns. He’ll be sentenced on October 30th. Given that the testimony in the trial ended today, the jury didn’t need much time in deciding the verdicts.

And that appears to be understandable, unlike Dr. Kriemelmeyer’s use of the English language. As I noted yesterday, Dr. Kriemelmeyer believes in David Wynn Miller’s dialect, “In the Truth.” He doesn’t believe that our current American flag is valid. He doesn’t believe that our Tax Code is valid.

Based on federal sentencing guidelines, Dr. Kriemelmeyer is looking at 27-33 months at ClubFed. And no use of language such as this, “FOR THE EDUCATIONAL-CORRECTIONS OF THE MODIFYING-COMMUNICATIONS ARE WITH THESE CLAIMS OF THE FICTIONAL-ADVERB-VERB-USURY WITH THE OPERATIONS/METHODS OF A FICTIONAL-MODIFICATION-LANGUAGE,” will lessen his sentence. (That quote was taken from Mr. Miller’s website.) And if he tries to lecture a judge in using the English language, I won’t be shocked to see him getting the maximum term of 9 years (3 years per count) plus restitution.

If you are wondering about the headline, so am I. But it’s a quote out of the trial of one Frederick Kriemelmeyer, a dentist in LaCrosse, Wisconsin. Dr. Kriemelmeyer is accused of four counts of tax evasion.

As the LaCrosse Tribune reported, Dr. Kriemelmeyer is a believer in David Wynn Miller. Miller does not use standard English; instead, he used a dialect he invented called “In the Truth.” It’s got a lot of capital letters, prepositional phrases, and not much in the way of punctuation. You can see samples by going to Mr. Miller’s website.

In any case, Dr. Kriemelmeyer challenged the indictment because it was in English—our English. That didn’t work (the judge let the indictment stand). The dentist challenged the US flag in the courtroom. No, I’m not joking about that. He didn’t win that argument.

David Wynn Miller believes that if you add extra punctuation to a tax return, you will somehow not have to pay taxes. At least, that’s what I think he espouses. Dr. Kriemelmeyer is a follower of Mr. Miller, and is conducting his own defense.

The government plans on having 15 of Dr. Kriemelmeyer’s patients testify as to how much they paid him. The government alleges that if there was an asterisk by a patient’s fees in Dr. Kriemelmeyer’s ledger, the actual payment was much higher. For example, $20* meant that the patient paid $100. If the government proves that, they’ve proved the case. The total tax evasion is alleged to be about $364,000.

The trial will likely last another few days.

While I’ve been gone for the last two weeks, I collected many stories about tax fraud. Here are just a few of them (if I included all of them, it would fill many pages of this blog).

Two members of a former Florida advertising agency pleaded guilty to conspiracy in a $1.5 million tax fraud. Michael and Michelle Cragan created bogus invoices, with the money mainly going to a third individual, Douglas Haase. Unfortunately for all concerned, the phony invoices were included on the business’ tax return. And with Mr. Haase receiving $1.5 million that wasn’t included on his tax return, we’re not talking peanuts here. Mr. Haase previously pleaded guilty. All are looking at spending time at ClubFed when sentenced (plus restitution).

>From Dickson City, Pennsylvania comes the story of Thomas Winnicki and his company Keystone Employee Benefits, Inc. He was in the employee leasing business. So far, so good. His clients paid him over $1 million for employment taxes that he was supposed to remit to the government. But when the business was going through a downturn, he used the $1 million for personal expenses rather than turning it over to the IRS. He pleaded guilty, and will be spending 18 months at ClubFed, and must make restitution of the over $1 million. The $100 “special assessment” he must also pay is the least of his worries.

A father-daughter team is accused of not paying taxes on $3.1 million of income. From Holmdel, New Jersey comes the tale of Anthony Ambrosia and his daughter, Lisa Derosa. The pair allegedly set up bank accounts in the names of children and other family members, and moved over $3.1 million into these accounts. They’re also accused of “structuring,” deliberately making deposits under the $10,000 federal currency transaction reporting limit. Mr. Ambrosia allegedly made numerous $9,500 deposits. His bank warned him about this, but he allegedly continued doing this. I suspect that the bank issues a Suspicious Activity Report (this isn’t mentioned in the news story but appears to be a reasonable conclusion), and the IRS and DOJ followed-up and discovered the alleged misdoings. If convicted, both Mr. Ambrosia and Ms. Derosa are looking at lengthy terms at ClubFed.

Finally, two tax “gurus” won’t be peddling their wares any time soon. I earlier reported about the convictions of Wade and Laura Cook. Wade Cook received 88 months—that’s 7 years, 4 months—at ClubFed. As Joe Kristan reported,

“Mr. Cook doesn’t seem to expect to appear before Judge Zilly again anytime soon:

Asked afterward to comment on the outcome, Cook remarked, “I’m not going to tell you that this judge is an a**hole. I’m not going to say that.”

Good thing he showed so much restraint.”

Joe also told the story of “We The People.” Robert Schulz had been enjoined from providing a tax scheme that caused employees and employers to not withhold from wages. Additionally, the “We The People” webpage must display the injunction. As of now, it doesn’t. Of course, expecting a member of the tax protester movement to comply with a ruling that would put him out of business (it’s hard to sell a product when the first thing potential clients would see on your webpage is an injunction against selling that product) isn’t a good bet. One last point: If you happened to be a customer of “We The People,” expect a visit from the IRS in your future. “We The People” is required to turn over its customer list to the government.

So it was not a good week to be a fraudster. And it was an especially bad week for tax protesters, as two of their champions discovered that there is an income tax, and you must pay it.

I’ve been saying for some time that offshore trusts and bank accounts set up with no purpose at all (except to avoid US income taxes) are definitely in the cross-hairs of the IRS. Another user of this scheme will be paying with five years at ClubFed.

George Schussel founded Digital Consulting Inc. in 1982. The company was successful—successful enough that Mr. Schussel allegedly looked for a means to avoid income taxes.

The government alleged that Mr. Schussel used an offshore account at the Bank of Bermuda to hide $8.5 million. The account was in the name of an alleged sham company. Given corporate tax rates, that’s a loss of about $2.75 million in taxes.

Unfortunately for Mr. Schussel, the IRS audited his 1995 tax returns in 1997-1998. The government alleged that Mr. Schussel obstructed the audit and evaded taxes. The jury agreed, and he was sentenced to five years at ClubFed, a $125,000 fine, and must meet with the IRS to resolve his outstanding tax liabilities.

Sometimes it’s much, much easier to just pay your taxes in the first place.

News Story: Boston Business Journal

The title of this post is a quote from the 11th Circuit Court of Appeals. Former Atlanta Mayor Bill Campbell had appealed his conviction and his sentence on tax fraud charges. The Appeals Court found his conviction and sentence to be entirely appropriate.

The Court ruling wasn’t kind to Campbell. Here are two excerpts that ran in the Atlanta Journal-Constitution:

“[Campbell is]…a first offender with an exceptional personal history who cannot be considered unlikely to commit further crimes.”

“The fact that Campbell, a lawyer and former federal prosecutor, committed his crimes while mayor of a major metropolitan city, knowing as he must have that his action would be publicly and deeply scrutinized, belies his assertion that he ‘cannot be considered likely to commit further crimes.'”

Needless to say, Campbell will not be leaving ClubFed until, at the earliest, October 2008.