Taxable Talk

Anabolic steroids are a controlled substance (generally illegal) in the United States. If you sell/distribute/traffic steroids, you can be arrested. One Houston, Texas dealer of steroids got lucky—or so he thought. He didn’t get arrested for distributing steroids. Instead, he got charged with tax evasion.

Remember Al Capone? The Chicago mobster committed lots of murders. But in the end the government couldn’t prove he committed any of them. However, it could and did prove he didn’t pay income tax on his ill-gotten gains, and Al Capone spent the last few years of his life at Alcatraz and similar ClubFed vacation spots.

Vernon Albert Richardson III admitted importing and selling steroids from 2000 – 2003 in his plea agreement. Mr. Richardson forgot one thing that would have been useful: pay the income tax on your illegal income. Yes, illegal income is just as taxable as legal income.

When Mr. Richardson is sentence later this year, he’ll probably receive a little under two years at ClubFed (based on Federal Sentencing Guidelines)

I’ll have quite a few posts over the next few days, but something came across the wire tonight that deserves reporting (even in my tired state). The ultimate shoe collector, Imelda Marcos, was acquitted of tax evasion.

Ms. Marcos, the wife of the late Philippine leader Ferdinand Marcos, was charged with evading taxes in 1986, and on two later dates. There was just one problem with that—the Marcoses left the Philippines in 1986 after Ferdinand Marcos ‘ rule ended (they went into exile in Hawaii).

Ms. Marcos’ attorneys also noted that when Mr. Marcos died there were newspaper stories globally and the Philippine’s Internal Revenue Bureau would have to have been deaf, dumb, and blind to have missed the news (these relate to the later two tax charges).

In any case, the judge in Quezon City noted that the prosecution had failed to show criminal intent. Indeed, Ms. Marcos was husbanding her shoe collection in Hawaii at the time.

So in this case, Ms. Marcos gets to wear shoes from her collection rather than prison loafers.

News Story: Manila Standard Today

As I head for another week on the road (with limited posting–I’ll be at the CSEA SuperSeminar Monday through Wednesday and in Chicago next weekend), there’s more than enough fraud for an uber-post.

We’ll start in Washington where it was announced that the probe of Jackson-Hewitt, the second largest national tax preparation firm, has grown. I previously reported on the chain’s problems. In a regulatory filing, Jackson Hewitt disclosed that more of its stores, including company-owned stores, are being investigated. The initial probe centered on one franchisee; the IRS is seeking to close the 125 stores owned by that franchisee. You can read about this here and here.

Let’s head across the country to Renton, Washington. I’ve said before that multi-level marketing programs are legal. But you do need to pay taxes based on your income from those programs, and not divert the income into a sham trust. It’s even worse if the IRS finds out about it, as Frederick and Denise Vance have discovered. They pleaded guilty to evading about $320,000 in taxes. It appears they’ve made restitution. But they’ll be sentenced in September and are looking at possible short stays at ClubFed.

Yet another bozo tax preparer is in trouble. Al Morton, Jr. was convicted in Birmingham, Alabama of 14 counts of filing false tax returns, 13 counts of bank fraud, and one count of conspiracy. Five others pleaded guilty earlier to similar charges in the scheme which involved filing 121 false refund anticipation loan claims totaling over $700,000. Mr. Morton is looking at a lengthy stay in ClubFed when he’s sentenced later this year.

Heading further south to West Palm Beach, James Exline was sentenced to ten months at ClubFed. Exline, a former City Commissioner in West Palm Beach, had earlier pleaded guilty to filing a false tax return as part of a land development investigation. He’ll also have to pay a $3000 fine and serve a year of supervised release.

The Abramoff scandal claimed a tax evasion victim. Italia Federici pleaded guilty to tax evasion and obstruction of Congress on Friday. Federici admitted lying to a Senate Indian Affairs Committee and not paying taxes from 2001 to 2003. Given that she owes “tens of thousands of dollars” in back taxes, she’s looking at a visit to ClubFed.

I chose five stories out of about 30 that came across the wires over the last couple of days. There are a lot of people trying for that dishonest buck…and they usually find that crime doesn’t pay.