Saturday, February 28, 2004
John Harpole was arrested on charges while exiting the plane
that brings back the workers from Prudhoe Bay. John said he knew
something was up when they stated on the airplane intercom to contact
the Alaska Airlines Counter.
I have not talked directly to John, but it seems that 6
police + IRS agents and others were present to arrest John. This of
course was for the show effect to whip others into line and as the
story spreads on the slope, the benefits of "taxpayers" not filing,
others will be of great benefit to the IRS.
John had a hearing this morning in the USDC at 10 am and was
released according to the clerk at USDC, but of course he was taken
back to the Anchorage Jail to await the fax and processing to exit.
I called at 12:40 PM and the fax is yet to arrive and the Anchorage
jail said to try again at 4 PM. Don't you just love the police
state criminals and how expeditiously they work. Anchorage jail is
about 7 block from the USDC.
Anchorage Jail is another step in the New World Order, as the
Anchorage court is right in the AJ - not the USDC -where John was
taken. There on only seats for about 15 people maximum. The
political prisoners are behind a bullet proof glass, as is the podium
with the microphone. If the prisoner tries to say something the
judge doesn't want on the record, the judge just kills the microphone
and proceeds forward. Unless you are an attorney (sic), they will
not let you use the telephone to talk to the prisoners. The
attorneys are also in the confined area if they are "represented."
John was supposedly charged with willful failure to file and
I am headed into Anchorage to file into federal court today
and will probably see him later.
Get the TRUTH about Paytriots and Tax Protestor Scams at http://quatloos.com
Thursday, February 26, 2004
Article published Feb 25, 2004
Federal judge finds tax protesters' logic baffling
Five stand accused of marketing 'abusive' tax-avoidance plans.
OCALA - A Mount Dora-based tax protester told an Ocala federal judge Tuesday that since he's not a U.S. citizen, the judge might be able to deport him to the place he was born - Texas.
Eddie Kahn told Senior U.S. District Judge William Terrell Hodges that although he was born in one state of the United States, he is a citizen only of Florida, not of the United States.
Hodges questioned Kahn's logic. "The U.S. Constitution doesn't apply to you?" Hodges asked.
"Only when traveling between the states," Kahn responded.
Hodges reserved ruling on whether he would find Kahn, Kahn's wife Kathleen, and three others in civil contempt of court. The Kahns, Gainesville lawyer Milton Baxley II, David Stephen Lokeitz and Texas resident Bryan Malatesta are under a temporary restraining order to stop selling what the Internal Revenue Service calls "abusive tax avoidance plans."
The U.S. Department of Justice filed a civil lawsuit against the five people and three incorporated businesses in December. Anne Norris Graham, the lawyer representing the government, argued that the defendants and the organizations - Guiding Light of God Ministries, American Rights Litigators, and Eddie Kahn and Associates - have been illegally interfering with the IRS's ability to collect taxes.
One of Kahn's Web sites says taxpayers are involved in a "master/servant relationship" with the IRS.
"If you act like a master and treat them like a servant, you get much better results," the Web site notes.
Hodges issued a temporary injunction in December, ordering the defendants to stop selling their tax products, post a copy of the injunction on affiliated Web sites, and provide lists of their customers to the Justice Department within 20 days of the initial order.
Graham said Tuesday that the defendants had done little or nothing to comply, and asked Hodges to jail them until they did.
"Due to the defendants' blatant defiance of this court's injunction, we feel that the court should incarcerate them," Graham said. "We do not anticipate that a monetary sanction would produce the desired coercive effect in these defendants."
The government's complaint alleges, among other things, that the defendants sold counterfeit checks for low fees to customers. The customers in turn sent the fake checks, made out in larger amounts, to the IRS, resulting in the agency releasing tax liens. The IRS has received counterfeit checks from American Rights Litigators and Guiding Light of God Ministries totaling more than $2.2 million, according to the complaint filed in December.
Eddie Kahn said Tuesday he never intended to break the law or deceive anyone and that he wanted to know what to do to be in compliance with Hodges' order. Kahn presented a floppy disc to Graham that he said contained the names of his organizations' customers.
Kathleen Kahn said she was a housewife who didn't work in the organizations. Baxley said he had not been affiliated with the organizations since October. Lokeitz said he had not intentionally violated Hodges' order.
Malatesta, who lives in Texas, did not appear Tuesday.
Eddie Kahn's logic appeared to escape Hodges at times.
"Ms. Graham has been under the presumption that my wife and I are U.S. citizens," Kahn said at one point. "We are Florida state citizens. . . . We are not federal citizens. We do not live on federal land."
When Hodges asked Kahn where he was born, Kahn responded that he was born in Texas. Hodges asked if Kahn had ever renounced his U.S. citizenship. Kahn replied that he couldn't renounce something he never had.
The judge asked Kahn if he was subject to deportation.
"I don't know where I'd go. Maybe back to Texas," Kahn responded.
"You could end up a stateless person," Hodges said.
Graham confirmed Tuesday that federal agents executed a search warrant at Kahn's Mount Dora offices last week as part of a separate criminal investigation.
Get the TRUTH about Paytriots and Tax Protestor Scams at http://quatloos.com
Wednesday, February 25, 2004
JOHN ASHCROFT, ATTORNEY GENERAL OF THE UNITED STATES; JAMES
ZIGLAR, COMMISSIONER OF THE IMMIGRATION & NATURALIZATION SERVICE;
UNITED STATES IMMIGRATION AND NATURALIZATION SERVICE,
Release Date: FEBRUARY 23, 2004
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
August Term, 2003
(Argued: December 3, 2003
Decided: February 23, 2004)
Before: CARDAMONE, SACK, and GIBSON,/*/ Circuit Judges.
 Appeal from a judgment of the United States District Court for the Eastern District of New York (Leonard D. Wexler, Judge) dismissing the petitioner-appellant's petition for a writ of habeas corpus preventing his deportation to Italy because (1) he was convicted of an aggravated felony under 8 U.S.C. section 1101(a)(43)(M)(ii), for which he thereby became deportable, and (2) discretionary relief from deportation was not available to him.
MATTHEW L. GUADAGNO, Bretz & Coven, LLP (Kerry William Bretz and
Jules E. Coven, of counsel), New York, NY, Petitioner-
DIONE M. ENEA, Special Assistant United States Attorney for the
Eastern District of New York (Roslynn R. Mauskopf, United States
Attorney, and Varuni Nelson, Assistant United States Attorney,
of counsel), Brooklyn, NY, for Respondents-Appellees.
SACK, Circuit Judge:
 The petitioner-appellant, Louis Evangelista, appeals from a judgment of the United States District Court for the Eastern District of New York (Leonard D. Wexler, Judge) dismissing his petition for a writ of habeas corpus to prevent his deportation/1/ to Italy. The district court held that Evangelista had been convicted of an offense "described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $ 10,000," 8 U.S.C. section 1101(a)(43)(M)(ii), for which he was deportable under the Immigration and Nationality Act (the "INA"). We agree with the district court's conclusion, although on grounds that differ somewhat from those on which the district court relied.
 The district court also held that Evangelista was not eligible for a waiver of deportation because he was convicted of the offense at issue after Congress had abolished such relief for persons convicted of an aggravated felony. The unavailability of a waiver is not impermissibly retroactive in this case, the district court reasoned, because irrespective of the timing of the underlying criminal conduct, Evangelista's conviction of the relevant crime occurred when the waiver was no longer available.
 The petitioner-appellant, Louis Evangelista, is a sixty- three-year-old native and citizen of Italy. He has been a lawful permanent resident of the United States since 1961. In 1995, a superseding indictment was filed in the United States District Court for the Eastern District of New York charging Evangelista with various federal tax crimes involving events that occurred as early as 1988. In count 26 of the superseding indictment, Evangelista was charged with "willfully attempt[ing] to evade and defeat [an] income tax by failing to pay said income tax to the Internal Revenue Service and by concealing and attempting to conceal from all proper officers of the United States of America his true assets" in violation of 26 U.S.C. section 7201. Superseding Indictment at 16, United States v. Evangelista, No. 94-CR-1277(S-2)(LDW) (E.D.N.Y. 1996) (emphasis added).
 Evangelista pleaded not guilty to all of the counts against him. However, a jury found him guilty on all counts. The district court's judgment of conviction, dated October 29, 1996, states that Evangelista was adjudged guilty under count 26 of "[a]ttempt[ing] to evade or defeat tax" in violation of 26 U.S.C. section 7201. Judgment of Conviction, United States v. Evangelista, No. CR 94-1277(S-2) (E.D.N.Y. Oct. 29, 1996) (emphasis added). Evangelista appealed his conviction to this Court. We affirmed. See United States v. Evangelista, 122 F.3d 112, 114 (2d Cir. 1997), cert. denied, 522 U.S. 1114 (1998). Our opinion focused primarily on counts under 26 U.S.C. section 7202, not on the section 7201 counts. Id. at 116-22. But we did note in passing that Evangelista "was convicted of evading personal income taxes (in violation of 26 U.S.C. section 7201)," id. at 113 (emphasis added), and that "[t]he jury found [Evanglista and another defendant] guilty on all of the counts with which they were charged," id. at 116.
 As a result of Evangelista's conviction, on April 14, 1998, the Immigration and Naturalization Service ("INS") issued to Evangelista a Notice To Appear, stating that he was subject to removal from the United States for having been convicted of an "aggravated felony" as defined in the INA, 8 U.S.C. section 1101(a)(43)(M)(ii). Section 1101(a)(43) contains a lengthy list of those crimes constituting an "aggravated felony" for the purpose of determining who is deportable under the INA. The list includes as an aggravated felony in section 1101(a)(43)(M)(ii) -- the section relevant to the Notice To Appear -- "an offense that . . . is described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $ 10,000." Id.
 In removal proceedings before an Immigration Judge ("IJ"), Evangelista challenged his potential deportation. He first contended that he had not been convicted of an aggravated felony because there was no clear and convincing evidence that he had been convicted under count 26 of evading taxes, rather than defeating taxes, and that only evading taxes constitutes an aggravated felony under the INA. Evangelista also argued that he was eligible for a waiver of deportation pursuant to former section 212(c) of the INA, 8 U.S.C. section 1182(c) (1994) (repealed by the Illegal Immigration Reform and Immigrant Responsibility Act of 1996 ("IIRIRA"), Pub. L. No. 104-208, Div. C, section 304(b), 110 Stat. 3009-546, 3009-597), because at the time of his criminal conduct he was eligible for the waiver. The IJ, rejecting Evangelista's arguments, ordered his removal.
 Evangelista appealed the IJ's decision to the Board of Immigration Appeals ("BIA"). The BIA held that Evangelista had been convicted of an aggravated felony within the meaning of the INA. First, the BIA concluded that Evangelista had been convicted of tax evasion, an aggravated felony under 8 U.S.C. section 1101(a)(43)(M)(ii). The BIA relied on (1) the judgment of conviction, which stated that Evangelista was found guilty on count 26 for attempting to evade or defeat taxes in violation of 26 U.S.C. section 7201, (2) the indictment, which set out count 26 as a charge of both evading taxes and defeating taxes, and (3) our decision on Evangelista's appeal, which referred to Evangelista as having been convicted of tax evasion. Second, the BIA reasoned that even if Evangelista had been convicted under section 7201 only of defeating taxes and not of evading them, he would nonetheless have committed an aggravated felony under the INA, because the parenthetical phrase in the relevant section -- "(relating to tax evasion)" -- is merely descriptive of the substance of section 7201. According to the BIA, the parenthetical phrase does not limit the definition of an aggravated felony under section 1101(a)(43)(M)(ii) to those offenses that involve tax evasion, but also includes those that involve defeating taxes. And third, the BIA concluded that even if the "relating to tax evasion" parenthetical phrase restricted the scope of section 1101(a)(43)(M)(ii) to convictions relating to tax evasion under 26 U.S.C. section 7201, defeating taxes was "relat[ed] to tax evasion" and therefore qualified as an aggravated felony. The BIA then held that Evangelista was not eligible for a waiver of deportation under former section 212(c) because he was convicted and formal deportation proceedings against him were begun only after the section was repealed. The BIA therefore dismissed Evangelista's appeal. See In re Evangelista, No. A12 352 319 (B.I.A. Oct. 25, 2000).
 Evangelista then filed in the district court a petition for a writ of habeas corpus pursuant to 28 U.S.C. section 2241 seeking relief from deportation. The court denied his petition. See Evangelista v. Ashcroft, 232 F. Supp. 2d 30 (E.D.N.Y. 2002). Relying on the conjunctive language in count 26 of the indictment ("willfully attempt[ing] to evade and defeat [an] income tax" (emphasis added)) and our opinion on Evangelista's appeal, the court concluded that "there can be no doubt that Evangelista was convicted of an offense 'described in section 7201 of Title 26 (relating to tax evasion) in which the revenue lost to the Government exceeds $ 10,000.'" Id. at 34 (quoting 8 U.S.C. section 1101(a)(43)(M)(ii)). The court therefore decided that Evangelista had been convicted of an aggravated felony and was deportable. Id. The district court also concluded that relief from deportation under former INA section 212(c) was not available to Evangelista, "a criminal defendant [who] elect[ed] to go to trial in connection with conduct or a conviction that pre-dates the repeal of Section 212(c), but [who was] convicted and placed in removal proceedings after the repeal of the statute." Id. at 37. According to the district court, it is the date of conviction, not the date of the criminal conduct or of entry of a plea of not guilty, that controls. The court reasoned that there are no fairness concerns when the defendant elects to proceed to trial -- as opposed to entering into a plea agreement -- before the repeal of section 212(c). Id. at 36.
 Evangelista appeals.
I. Conviction for an Aggravated Felony
 "Any alien who is convicted of an aggravated felony at any time after admission [to the United States] is deportable." 8 U.S.C. section 1227(a)(2)(A)(iii). The INS "has the burden of establishing [deportability] by clear and convincing evidence," which must be "reasonable, substantial, and probative." Id. section 1229a(c)(3)(A).
 We have no jurisdiction to review a final order of removal against an alien who is removable for having committed an aggravated felony. Id. section 1252(a)(2)(C). But "[w]e do retain jurisdiction . . . to review the question whether, as a matter of law, [a petitioner] committed an 'aggravated felony' under [the INA]." Dalton v. Ashcroft, 257 F.3d 200, 203 (2d Cir. 2001). We therefore have jurisdiction to review whether Evangelista was convicted of an aggravated felony under the INA.
 The INA sets forth a list of offenses that qualify as types of aggravated felonies. Among them is "an offense that . . . is described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $ 10,000." 8 U.S.C. section 1101(a)(43)(M)(ii). 26 U.S.C. section 7201 in turn criminalizes "willful attempts in any manner to evade or defeat any tax imposed by [Title 26] or the payment thereof." We therefore must decide whether Evangelista's conviction under 26 U.S.C. section 7201 falls within the scope of section 1101(a)(43)(M)(ii), thus rendering him deportable.
A. Standard of Review
 "On appeal from the denial of a habeas petition brought pursuant to 28 U.S.C. section 2241, we review the merits of the petition de novo." Chrzanoski v. Ashcroft, 327 F.3d 188, 191 (2d Cir. 2003). We review the BIA's interpretation of ambiguous provisions of the INA, however, with substantial deference to the BIA, Dickson v. Ashcroft, 346 F.3d 44, 48 (2d Cir. 2003), rejecting its interpretation only if it is "arbitrary, capricious, or manifestly contrary to the statute," Chevron, U.S.A., Inc. v. Natural Resources Def. Council, Inc., 467 U.S. 837, 844 (1984). "If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43. We review de novo the BIA's interpretation of federal criminal statutes, such as 26 U.S.C. section 7201, because we and not they are charged with the responsibility of such interpretation. See Dickson, 346 F.3d at 48; see also Ming Lam Sui v. INS, 250 F.3d 105, 116 (2d Cir. 2001) (reviewing de novo whether a petitioner's conviction fits within the BIA's reasonable interpretation of a subsection of the definition of "aggravated felony").
B. Scope of Section 1101(a)(43)(M)(ii)
1. The Arguments.
 Evangelista argues that the language of 8 U.S.C. section 1101(a)(43)(M)(ii) -- an offense "described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $ 10,000" -- together with the rule of lenity, require us to interpret that section to render deportable only persons convicted for tax evasion under 26 U.S.C. section 7201, and not those convicted of "defeat[ing] a tax" under that section. He contends further that the crime of "defeat[ing] a tax" is not a section 7201 crime "relat[ed] to tax evasion," under the language of the parenthetical phrase, because "'[e]vasion' appears to involve concealment of assets, whereas 'defeating' appears to involve improper tax avoidance, unlawfully minimizing one's tax liability, or other refusal to pay tax." Petitioner's Br. at 16. Evangelista urges us to conclude that because only tax evasion and section 7201 crimes related to tax evasion are aggravated felonies under the INA and because the INS did not meet its burden of proof to establish that Evangelista was convicted of tax evasion or a section 7201 crime "relating to tax evasion," he is not deportable for commission of an aggravated felony under the INA.
 The government responds that the language of section 1101(a)(43)(M)(ii) provides that any conviction under 26 U.S.C. section 7201 is an aggravated felony, provided that the revenue loss to the government exceeds $ 10,000, because the parenthetical phrase "relating to tax evasion" is merely descriptive of the offenses set out in 26 U.S.C. section 7201. And, the government continues, even if section 1101(a)(43)(M)(ii) is restricted to convictions under 26 U.S.C. section 7201 for offenses described in the parenthetical phrase -- "relating to tax evasion" -- a conviction for "defeat [of a] tax" is a conviction under 26 U.S.C. section 7201 that "relat[es] to tax evasion," because there is no legal distinction between tax evasion and "defeat [of a] tax." The government asks us to conclude that Evangelista is removable whether convicted under section 7201 of tax evasion, defeating taxes, or both.
 There are, it seems to us, at most four offenses described in 26 U.S.C. section 7201: (1) "evad[ing] . . . a tax"; (2) "defeat[ing] a tax"; (3) "evad[ing] . . . the payment thereof;" and (4) "defeat[ing] . . . the payment thereof." Cf. Sansone v. United States, 380 U.S. 343, 354 (1965) ("As this Court has recognized, section 7201 includes the offense of willfully attempting to evade or defeat the assessment of a tax as well as the offense of willfully attempting to evade or defeat the payment of a tax." (emphasis omitted)). Although Evangelista attempts to distinguish between "defeat[ing]" a tax and "evad[ing]" a tax, courts and commentators use the two terms interchangeably. See, e.g., id. at 351 ("As has been held by this Court, the elements of section 7201 are willfulness; the existence of a tax deficiency; and an affirmative act constituting an evasion or attempted evasion of the tax." (citations omitted)); United States v. Schwartz, 325 F.2d 355, 356 (3d Cir. 1963) (noting first that the defendant was indicted for tax evasion and then that the substance of the charge is that he willfully attempted to defeat the payment of taxes); Ian M. Comisky, Lawrence S. Feld & Steven M. Harris, Tax Fraud & Evasion paragraph 7.01[a] (2004) ("[Section] 7201 defines two distinct crimes: (1) the willful attempt to evade or defeat any tax and (2) the willful attempt to evade or defeat the payment of any tax."). We conclude from this that whatever differences there may be between them, "defeat [of a] tax" is at least "relat[ed] to tax evasion," rendering a conviction for it an "aggravated felony" within section 1101(a)(43)(M)(ii). Whether Evangelista was convicted under 26 U.S.C. section 7201 of evading taxes, defeating taxes, or both, according to the accepted usage of the terms, he was convicted of an aggravated felony under section 1101(a)(43)(M)(ii). We therefore agree with the BIA's reading of section 1101(a)(43)(M)(ii).
 This reading of "relating to tax evasion" obtains whether the parenthetical phrase in section 1101(a)(43)(M)(ii) has a restrictive meaning, as Evangelista argues, or a descriptive meaning, as the government argues and as the BIA determined. And inasmuch as we see no ambiguity in the scope of section 1101(a)(43)(M)(ii) as applied to Evangelista, the rule of lenity has no place in our analysis. See INS v. Cardoza-Fonseca, 480 U.S. 421, 449 (1987) (noting "the longstanding principle of construing any lingering ambiguities in deportation statutes in favor of the alien"); Fong Haw Tan v. Phelan, 333 U.S. 6, 10 (1948) ("We resolve . . . doubts in favor of [a] construction [of a deportation statute in favor of a habeas corpus petitioner] because deportation is a drastic measure and at times the equivalent of banishment or exile. . . . [S]ince the stakes are considerable for the individual, we will not assume that Congress meant to trench on his freedom beyond that which is required by the narrowest of several possible meanings of the words used." (emphasis added)).
 In United States v. Monjaras-Castaneda, 190 F.3d 326 (5th Cir. 1999), cert. denied, 528 U.S. 1194 (2000), the Fifth Circuit took a somewhat different approach in reaching a similar conclusion in a similar case. 8 U.S.C. section 1101(a)(43)(N) declares "an offense described in paragraph (1)(A) or (2) of section 1324(a) of this title (relating to alien smuggling)" to be an aggravated felony. In interpreting the parenthetical phrase as descriptive rather than restrictive, the Fifth Circuit relied on grammatical rules and the structure and context of section 1101(a)(43) as a whole to determine that the parenthetical phrase modifies "paragraph (1)(A) or (2) of section 1324(a) of this title" rather than "an offense." Id. at 329-30 (upholding an enhanced sentence that the defendant received for having committed an "aggravated felony," as defined by section 1101(a)(43)(N), for his conviction under 8 U.S.C. section 1324(a)(1)(A) of transporting aliens, which is arguably different from smuggling aliens); accord Patel v. Ashcroft, 294 F.3d 465, 472-73 (3d Cir. 2002) (holding, in reliance on Monjaras-Castaneda and other cases, that a habeas petitioner's conviction for harboring an alien under 8 U.S.C. section 1324 is an "aggravated felony" under 8 U.S.C. section 1101(a)(43)(N), rendering the petitioner deportable); United States v. Galindo-Gallegos, 244 F.3d 728, 733-34 (9th Cir. 2001) (holding that a defendant's conviction for transporting aliens is an aggravated felony and that the defendant therefore deserved an enhanced sentence); United States v. Salas-Mendoza, 237 F.3d 1246, 1247-48 (10th Cir. 2001) (same).
 The Monjaras-Castaneda court reasoned that traditional rules of grammar indicate that the parenthetical phrase in section 1101(a)(43)(N) modifies "paragraph (1)(A) or (2) of section 1324(a) of this title" because of its placement following those words instead of directly after the word "an offense." Monjaras-Castaneda, 190 F.3d at 329. It then noted that section 1101(a)(43) contains a long list of aggravated felonies that it references by statutory section. The court concluded that parenthetical phrases found throughout the statute were included to assist readers in identifying the crimes referred to by the statute, without having to endure the "long and arduous process" of "look[ing] up each section number in the Code." Id. at 330. The court then observed that other parenthetical phrases in that section are expressly restrictive. See id. (quoting 8 U.S.C. section 1101(a)(43)(F) (listing as an aggravated felony "a crime of violence (as defined in section 16 of Title 18, but not including a purely political offense) for which a term of imprisonment is at least one year") and 8 U.S.C. section 1101(a)(43)(J) (enumerating "an offense described . . . in section 1084 (if it is a second or subsequent offense)" as an aggravated felony)). The Fifth Circuit was of the view that had Congress intended the parenthetical phrase in section 1101(a)(43)(N) to be restrictive, it would have said so, as it had in the other subsections. Id.
 We are not entirely comfortable with applying the Fifth Circuit's approach to the case before us. Section 1101(a)(43)(L) deems to be an aggravated felony an offense described in:
. . .
(ii) section 421 of Title 50 (relating to protecting the
identity of undercover intelligence agents); or
(iii) section 421 of Title 50 (relating to protecting the
identity of undercover agents).
8 U.S.C. section 1101(a)(43)(L). The legislative history indicates that the addition of section 1101(a)(43)(L)(iii) to what already included section 1101(a)(43)(L)(ii) served the purpose of "add[ing a] new offense to the definition relating to . . . revealing the identity of undercover agents." IIRIRA, H.R. Conf. Rep. No. 104-828, at 223 (1996). Plainly, the parenthetical phrases in subsections (L)(ii) and (L)(iii) distinguish between different parts of section 421 of Title 50 -- one relating to "undercover intelligence agents" and one relating to "undercover agents"; they therefore do not simply describe 50 U.S.C. section 421. Evangelista argues in his reply brief that the inclusion of both sections 1101(a)(43)(L)(ii) and (iii) as distinct types of an aggravated felony where the parenthetical phrases cannot be read as descriptive indicates that the similar parenthetical phrase in section 1101(a)(43)(M)(ii) is not descriptive either. Evangelista's objection is sufficiently compelling for us to refrain from adopting the reasoning of Monjaras-Castaneda for section 1101(a)(43)(N) as our analysis of the language of section 1101(a)(43)(M)(ii).
 We conclude that irrespective of whether Evangelista was convicted of tax evasion under 26 U.S.C. section 7201, he was convicted of an offense "relating to tax evasion" under 26 U.S.C. section 7201. Evangelista is thus deportable./2/
II. Section 212(c) Waiver of Deportation
 Because we conclude that Evangelista is deportable, we must consider his argument that he is eligible for a waiver of deportation pursuant to former section 212(c) of the INA, 8 U.S.C. section 1182(c) (1994). He argues that the application of the INA would be impermissibly retroactive if it disqualified him from consideration for such a waiver under a repealed section of the INA, because that section was in effect when he violated 26 U.S.C. section 7201. He asserts that he relied on the waiver's availability, even though it had been repealed at the time he was convicted of the crime and when formal deportation charges were brought against him. The government responds that we are bound by our case law establishing that it is not impermissibly retroactive to deny discretionary relief to petitioners such as Evangelista, who, after the repeal, were convicted of an aggravated felony after a jury trial and against whom deportation proceedings were commenced. We agree with the government.
A. Repeal of Section 212(c)
 A recent opinion by this Court succinctly sets forth the background of former INA section 212(c), which provided for discretionary relief from deportation:
[T]he deportation of resident aliens who commit aggravated
felonies is controlled by the Immigration and Nationality Act
("INA"). See 8 U.S.C. section 1227(a)(2)(A)(iii) (2001).
Prior to 1997, aliens deportable under the INA could apply to
the Attorney General for a discretionary waiver of deportation
pursuant to section 212(c) of the INA. To qualify for such relief,
an alien was required to show that he (1) was a lawful permanent
resident of the United States, (2) had an unrelinquished
domicile of seven consecutive years, and (3) had not committed
an aggravated felony for which he had served a term of at least
five years. See 8 U.S.C. section 1182(c) (1994). If the
alien met these requirements, the Attorney General had the
discretion to waive deportation.
Rankine v. Reno, 319 F.3d 93, 95 (2d Cir.), cert. denied sub nom. Lawrence v. Ashcroft, 124 S. Ct. 287 (2003). But in 1996,
Congress enacted first the Anti-Terrorism and Effective Death
Penalty Act ("AEDPA"), which limited eligibility for relief
under section 212(c), see AEDPA, Pub.L. No. 104-132, section
440(d), 110 Stat. 1214, 1277 (1996), and then the Illegal
Immigration Reform and Immigrant Responsibility Act . . . which
repealed INA section 212(c) completely, effective April 1, 1997.
See IIRIRA, Pub.L. No. 104-208, section 304(b), 110 Stat.
3009-546, -597 (1996). Section 212(c) relief was, in effect,
replaced by a new form of relief called "cancellation of
removal," 8 U.S.C. section 1229b, which allows the Attorney
General to cancel removal proceedings for a class of resident
aliens that does not include those convicted of an aggravated
felony. In removal proceedings commenced after April 1, 1997,
therefore, resident aliens convicted of an aggravated felony are
no longer eligible for any form of discretionary relief from
Id. at 95-96.
B. Standard of Review
 Whether the repealed section 212(c) may be applied to an alien convicted of an aggravated felony based on criminal acts that took place before the repeal is a question of law that we review de novo. Domond v. U.S. INS, 244 F.3d 81, 84 (2d Cir. 2001).
 We held in Domond that the repeal of section 212(c) "imposes no new legal consequences on aliens . . . whose criminal conduct pre-dates AEDPA, but whose convictions came after AEDPA's enactment. It is the conviction, not the underlying criminal act, that triggers the disqualification from section 212(c) relief." Id. at 85-86 (internal quotation marks omitted). We said that "it cannot reasonably be argued that aliens committed crimes in reliance on a hearing that might possibly waive their deportation." Id. at 86.
 The Supreme Court subsequently addressed a related question in INS v. St. Cyr, 533 U.S. 289 (2001). It held that section 212(c) relief, though repealed, "remains available for aliens . . . whose convictions were obtained through plea agreements and who, notwithstanding those convictions, would have been eligible for section 212(c) relief at the time of their plea under the law then in effect." Id. at 326. The Court reasoned that "[g]iven the frequency with which section 212(c) relief was granted in the years leading up to AEDPA and IIRIRA, preserving the possibility of such relief would have been one of the principal benefits sought by defendants deciding whether to accept a plea offer or instead to proceed to trial." Id. at 323 (footnote omitted). The Court observed that it could "consider an alien's reasonable reliance on the continued availability of discretionary relief from deportation when deciding whether the elimination of such relief has a retroactive effect." Id. at 324.
 Subsequently, two judges of the United States District Court for the Eastern District of New York each urged us to reconsider our holding in Domond in light of St. Cyr. See Mohammed v. Reno, 205 F. Supp. 2d 39, 39 (E.D.N.Y.) (Gleeson, J.) (following Domond, but stating that "Domond is at odds with controlling case law of the Supreme Court"), stay pending appeal vacated, 309 F.3d 95 (2d Cir. 2002); Beharry v. Reno, 183 F. Supp. 2d 584, 591 (E.D.N.Y. 2002) (Weinstein, J.) ("Domond . . . should be reconsidered as the courts interpret and develop the Supreme Court's more recent immigration rulings and the requirements of international law."), rev'd sub nom. Beharry v. Ashcroft, 329 F.3d 51 (2d Cir. 2003).
 We have reconsidered Domond's viability in light of St. Cyr in several cases, and in each concluded that Domond remains good law despite St. Cyr. See, e.g., Khan v. Ashcroft, 352 F.3d 521, 525 (2d Cir. 2003); Beharry v. Ashcroft, 329 F.3d 51, 63 (2d Cir. 2003); Mohammed v. Reno, 309 F.3d 95, 103 (2d Cir. 2002); accord Swaby v. Ashcroft, --- F.3d ---, ---, 2004 WL 193576, at *4, 2004 U.S. App. LEXIS 1569, at *15-*17 (2d Cir. Feb. 3, 2004); Rankine, 319 F.3d at 102; Dias v. INS, 311 F.3d 456, 458 (1st Cir. 2002) (per curiam), cert. denied, 123 S. Ct. 2574 (2003); Chambers v. Reno, 307 F.3d 284, 286 (4th Cir. 2002); Armendariz-Montoya v. Sonchik, 291 F.3d 1116, 1121-22 (9th Cir. 2002), cert. denied, 123 S. Ct. 2247 (2003).
 Rankine is directly on point. We held there that "the repeal of section 212(c) relief does not have an impermissibly retroactive effect when applied to" an alien against whom the INS commenced formal removal proceedings after the passage of AEDPA and IIRIRA, but who was convicted of an aggravated felony for criminal conduct that occurred before the passage. Rankine, 319 F.3d at 102. We reasoned that St. Cyr did not directly govern Rankine's outcome because the former case involved a petitioner who pleaded guilty before the repeal of section 212(c), while the latter involved petitioners who pleaded not guilty, proceeded to trial, and were convicted before the repeal of section 212(c). Id. at 99./3/ This difference was material in two ways:
First, none of these petitioners [who proceeded to trial]
detrimentally changed his position in reliance on continued
eligibility for section 212(c) relief. Unlike aliens who entered
pleas, the petitioners made no decision to abandon any rights
and admit guilt -- thereby immediately rendering themselves
deportable -- in reliance on the availability of the relief
offered prior to IIRIRA. The petitioners decided instead to go
to trial, a decision that, standing alone, had no impact on
their immigration status. Unless and until they were convicted
of their underlying crimes, the petitioners could not be
deported. . . .
Second, the petitioners have pointed to no conduct on their
part that reflects an intention to preserve their eligibility
for relief under section 212(c) by going to trial.
Id. at 99-100. Because Rankine and its reasoning squarely govern Evangelista's challenge, we conclude that denial of section 212(c) relief to Evangelista is not impermissibly retroactive./4/ Evangelista therefore does not qualify to apply for a waiver of deportation.
 For the foregoing reasons, we conclude that the district court properly dismissed Evangelista's petition for a writ of habeas corpus. The judgment of the district court is affirmed.
/*/The Honorable John R. Gibson, of the United States Court of Appeals for the Eighth Circuit, sitting by designation.
/1/The Illegal Immigration Reform and Immigrant Responsibility Act of 1996, Pub. L. No. 104-208, Div. C, 110 Stat. 3009-546, "realigned the vocabulary of immigration law, creating a new category of 'removal' proceedings that largely replaces what were formerly exclusion proceedings and deportation proceedings." Gerald L. Neuman, Habeas Corpus, Executive Detention, and the Removal of Aliens, 98 Colum. L. Rev. 961, 966 (1998); see also Mohammed v. Reno, 309 F.3d 95, 96 (2d Cir. 2002) (referring to the change in nomenclature). We nonetheless use the terms "deport" and "deportation" from time to time in this opinion as well-worn colloquialisms for "remove" and "removal," respectively.
/2/Evangelista does not contest the BIA's finding that his crime caused revenue loss to the government exceeding $ 10,000, as required by 8 U.S.C. section 1101(a)(43)(M)(ii).
/3/The only difference between Rankine and the instant case is that in Rankine, the petitioners were convicted before the passage of AEDPA or IIRIRA, see Rankine, 319 F.3d at 96, while Evangelista was convicted after the passage of AEDPA and IIRIRA. If anything, that means that the petitioners in Rankine had a stronger case than Evangelista has, so the holding of Rankine must apply to him.
/4/In his reply brief, Evangelista urges for the first time that he could show detrimental reliance on repealed section 212(c) because he could have, but did not, file an administrative motion for a discretionary waiver of deportation before the repeal of the waiver for aggravated felons. At oral argument, the government replied that this argument is not properly before us because it was made for the first time in Evangelista's reply brief. The government continued that on the merits, Evangelista had no reliance interest because he did not file such a motion and, moreover, because he could not file such a motion until he became eligible for deportation upon his conviction, which postdated the repeal of waiver for aggravated felons. We do not consider the merits of Evangelista's argument, because "[w]e will not consider an argument raised for the first time in a reply brief." See United States v. Yousef, 327 F.3d 56, 115 (2d Cir. 2003).
Get the TRUTH about Paytriots and Tax Protestor Scams at http://www.quatloos.com/Tax-Forums/viewforum.php?f=8
United States v. Randall B. Jarvis, et al., Civil No. 03-6005-
CV-SJ-GAF (W.D. Mo. Sept. 26, 2003)
UNITED STATES OF AMERICA,
RANDALL BRIAN JARVIS, A/K/A "CHRISTOPHER MICHAELSON" AND
"JOSIAH RICHARDS," D/B/A ORDER OF JESUS CHRIST'S DISCIPLES;
THE ORDER OF CHRISTIAN DISCIPLES; THE CHURCH OF JESUS CHRIST
DISCIPLES; AND CHRISTIAN DISCIPLES INTERNATIONAL,
Release Date: NOVEMBER 12, 2003
IN THE UNITED STATES DISTRICT COURT FOR THE
WESTERN DISTRICT OF MISSOURI
(St. Joseph Division)
CIVIL CONTEMPT ORDER REMANDING DEFENDANT, RANDALL BRIAN JARVIS,
TO THE CUSTODY OF THE UNITED STATES MARSHAL
 On September 26, 2003, a hearing was held to determine Defendant's compliance with this Court's July 1, 2003 Permanent Injunction Order. After the hearing, this Court found Randall Brian Jarvis in contempt of the July 1, 2003 Permanent Injunction Order and ordered him to pay a coercive fine of $ 500 per day beginning on September 26, 2003 and ending when Jarvis purged himself of the contempt. This Court further stated that it would order coercive incarceration of Jarvis if he continued to defy the Court by failing to purge himself of contempt and if the monetary sanction reached $ 7,500.
 After reviewing the Motion and Declaration filed by the United States, as well as the Court's records, this Court finds as follows:
A. The fines imposed by this Court's September 26, 2003 Order
have exceeded $ 7,500; and
B. Jarvis remains in contempt of this Court's July 1, 2003 Order
because he has not (1) provided to all persons or entities for
whom he has, since 1999, sold trust packages, provided tax
advice, organized trusts, developed sham ministries, and/or
prepared or provided trust documents, based on the sham
transactions described in the Complaint, a copy of (a) this
Order and (b) a copy of the complaint. In addition, Jarvis did
not file with the Court within 15 days of September 26, 2003 a
certification signed under penalty of perjury that he sent the
mailing described above; and (2) turned over to the United
States all records in his possession or to which he has access,
that identify (a) the persons or entities to whom Defendant gave
or sold, directly or indirectly, any materials related to his
abusive trust scheme, and (b) the persons or entities who
purchased or used any other tax shelter, plan, or arrangement
that Defendant has promoted or otherwise been associated with.
 Accordingly, IT IS ORDERED that the United States Marshal arrest and detain Randall Brian Jarvis until such time as the Court determines that Randall Brian Jarvis has purged himself of the contempt by complying with the Orders of this Court, or until further Order of this Court.
Date: November 12, 2003
/s/ Gary A. Fenner
Gary A. Fenner, Judge
United States District Court
Get the TRUTH about Paytriots and Tax Protestor Scams at http://www.quatloos.com/Tax-Forums/viewforum.php?f=8
Tuesday, February 24, 2004
IRS Taking The Gloves Off
Get the TRUTH about Paytriots and Tax Protestor Scams at http://www.quatloos.com/Tax-Forums/viewforum.php?f=8
Thursday, February 19, 2004
U.S. Department of Justice
United States Attorney
District of Hawaii
PJKK Federal Building (808) 541-2850
300 Ala Moana Blvd., Room 6-100 FAX (808) 541-2958
Honolulu, Hawaii 96850
February 12, 2004
For Immediate Release
P R E S S R E L E A S E
A federal grand jury in Honolulu, Hawaii, returned a 148-count indictment today against five employees of RB Tax Service, RICHARD JAMES BASUEL, RICHARD JAMES BASUEL II, DINA GRACE NAUI CALEDA, ROSALINDA I TAMAYO (fka Rosalinda DeGuzman) and VIVIAN WAI WON SOONG with tax-related offenses. Each defendant was charged with one count of conspiracy to defraud the United States by obstructing the function of the Internal Revenue Service in the collection of tax. In addition to the conspiracy charge, BASUEL was charged with 46 counts, BASUEL II with 21 counts, CALEDA with 26 counts, TAMAYO with 24 counts, and SOONG with 30 counts of willfully preparing false tax returns and aiding and abetting in the preparation of false tax returns.
According to United States Attorney Edward H. Kubo, Jr., the indictment alleges that between January 25, 2000 and April 5, 2000, BASUEL, BASUEL II, CALEDA, TAMAYO and SOONG prepared and submitted false 1997, 1998 and 1999 federal tax returns on behalf of their clients, knowing they were fraudulent and false as to a material matter.
The indictment alleges that all five return preparers promoted a "new way" of preparing tax returns to their clients in which they disguised income earned in Hawaii as foreign earned income. In most instances, application of their "new way" of preparing returns resulted in a reported adjusted gross income of zero and a refund of all of the client's federal tax withholdings.
BASUEL, BASUEL II, CALEDA, TAMAYO and SOONG, according to the indictment, caused in excess of 900 false returns to be filed and falsely claimed in excess $4,000,000 in federal tax refunds from the United States government.
If convicted on the conspiracy count, each defendant faces a maximum penalty of five years in prison and a fine of $250,000. Each count charging the willful preparation of false tax returns carries a maximum penalty of three years in prison and a fine of $250,000. The precise sentence, if convicted, will be determined pursuant to the U.S. Sentencing Guideline.
United States Attorney Kubo cautioned that an indictment is merely an accusation, and the defendants are presumed innocent unless and until proven guilty.
The case was investigated by the Honolulu Office of the Internal Revenue Service, Criminal Investigation. The prosecution is being handled by Assistant U.S. Attorney Leslie E. Osborne, Jr.
Wednesday, February 18, 2004
FOR IMMEDIATE RELEASE
WEDNESDAY, FEBRUARY 18, 2004
TDD (202) 514-1888
JUSTICE DEPARTMENT ACTS TO SHUT DOWN TAX SCAM PROMOTION
Tacoma, Washington Man Alleged To Promote Fraudulent Tax Scheme
WASHINGTON, D.C. - The Justice Department today filed suit in the U.S. District Court in Tacoma, Washington, asking the court to bar Jack Cohen of Tacoma from selling allegedly illegal tax schemes. The civil injunction suit alleges that Cohen, through his website, www.taxax.org promotes a fraudulent tax scheme which falsely states that American citizens who receive income from sources within the United States are not required to file federal income tax returns or pay federal income taxes.
The government’s court filing notes that Cohen’s position, also known as the “U.S. Sources argument” or the “Section 861 argument” (after the tax-law provision it misinterprets), has repeatedly been rejected by federal courts.
“Time and again, federal courts have rejected the so-called Section 861 argument as frivolous,” said Eileen J. O’Connor, Assistant Attorney General in charge of the Justice Department’s Tax Division. “People who sell or participate in these illegal schemes risk serious consequences, including substantial civil penalties, and, where appropriate, criminal prosecution.”
According to the suit filed today, Cohen sells his customers a “package” that falsely states that only income from foreign sources must be reported on federal income tax returns. Other packages Cohen allegedly sells include a “W-4 Killer,” for “employees who wish to stop the withholding process,” and a “Custom Letter Pack,” which purports to “reverse the government’s presumption that we are ‘taxpayers’ pursuant to the Code....”
The suit alleges that Cohen’s newest package consists of forms employees can use to threaten lawsuits against employers who refuse their requests to stop federal income tax withholding.
A Texas man, Dick Simkanin, was convicted of tax crimes last month in connection with his failure to withhold federal income taxes from employees’ pay. Simkanin faces a statutory maximum sentence of 129 years imprisonment and millions of dollars in fines. He is scheduled to be sentenced on April 30, 2004. Information on that case is available at http://www.usdoj.gov/usao/txn/PressRel04/simkanin_convict_pr.html.
The Justice Department has also obtained many injunctions against promoters of the “U.S. Sources” or “Section 861” argument. Information on those cases can be found at:
Information on the Justice Department’s Tax Division can be found at http://www.usdoj.gov/tax/.
Tax preparer guilty of fraud, theft charges
By Curtis Lum
Honolulu Advertiser Staff Writer
A Circuit Court jury deliberated for about four hours yesterday before finding a 62-year-old man guilty of multiple counts of tax fraud.
Richard J. Basuel was found guilty of 11 counts of attempting to evade taxes, 11 counts of aiding or abetting the filing of false or fraudulent tax returns, and one count of first-degree theft. Basuel faces up to 98 years in prison and fines of more than $2 million when he is sentenced by Circuit Judge Michael Wilson on May 12.
Basuel prepared state tax returns for clients in 2000 and 2001 and claimed their wages were not subject to taxation under state and federal law, the state attorney general's office said. Basuel is a "devotee" of Larken Rose, a tax protester who produced a video that misinterprets the Internal Revenue Code and holds that wages are not taxable, the attorney general said.
The attorney general said Rose's argument has been debunked by courts nationwide. Hawai'i has excluded the misinterpretation of the code from applicability under state law.
A federal grand jury last week indicted Basuel and four other employees of a tax service on charges of obstructing the Internal Revenue Service. The indictment says the five promoted a "new way" of preparing returns for clients, disguising income earned in Hawai'i as foreign earned income and reporting adjusted gross income of zero.
Tuesday, February 17, 2004
Ex-state trooper pleads guilty to tax fraud
A former state trooper has been ordered to pay more than $800 in fines and back taxes and may avoid a jail sentence after pleading guilty to filing a false tax return, the state Attorney General's office said.
Mark T. Bolick's one-year jail sentence would be suspended to three years probation once he pays court fees and $300 of a $1,000 fine. The balance of the fine would be suspended.
Judge Lee S. Alford also ordered Bolick to pay $507 in restitution to the S.C. Department of Revenue.
Bolick, 39, of Rock Hill, indicated that he had earned no taxable income on 1999 tax return and claimed a refund of $502. An investigation showed that he had earned $19,239.30 that could be taxed and owed $507 in taxes.
Treasury agents raid office in Mount Dora
A lawsuit said a ministry sells tax programs showing how to hide income.
By Martin E. Comas | Sentinel Staff Writer
Posted February 17, 2004
MOUNT DORA -- Federal agents with the U.S. Treasury Department have searched a second-story office suite at 440 S. Donnelly St., carrying out boxes filled with documents and computer equipment, Mount Dora police said Monday.
Shop owners in the area said the office is run by Guiding Light of God Ministries, headed by Eddie Kahn and his wife, Kathleen, of Sorrento.
Because of Monday's federal holiday, federal officials were unavailable for comment.
In December, the Justice Department filed a lawsuit against the couple and several others, saying the group has been selling fraudulent tax programs through the ministry, showing customers how to hide income and assets to avoid paying federal taxes and how to obstruct IRS investigations.
The group, according to the lawsuit, also sold counterfeit checks to pay taxes, plus harassing letters to the IRS. Federal investigators estimated 11 checks totaling more than $2.2 million were sold.
Last August, Kahn transformed his business, called American Rights Litigators, into the Guiding Light of God Ministries. The Justice Department said the ministry was a business, indistinguishable except in name from American Rights Litigators. The organization, according to the suit, is also led by Milton Hargraves Baxley II, a lawyer in Gainesville, and Bryan Malatesta, a certified public accountant in Cleburne, Texas.
The Kahns did not return phone calls Monday.
According to his Web site, Eddie Kahn says he does not operate a business, but a Christian ministry, described as a corporation with more than 4,000 clients. His Web site stated that the IRS is not a lawful organization and that taxes do not finance the U.S. government, but are diverted to the International Monetary Fund.
On Monday, a receptionist at the Mount Dora office would not comment on the lawsuit or on the ministry.
Monday, February 16, 2004
Gene Chapman says that he is fed up with the tax protestor movement, and is starting to think that all the tax protestors care about is not paying taxes. Ding! Ding! Ding! We have a winner. Gene seems like a really good guy, but he is very gullible and has been taken in hook, line and sinker by the gurus who are using him to keep their scams alive so that they can sell their books and tapes and junk. Hopefully, Gene will continue to see the light.
Oh, yeah, one tax protestor has been hauled back to the U.S. to face tax evasion charges. Check out of the following story. Another day, another bad day for tax protestors . . .
Ex-Boca chiropractor faces tax charge
By Mary McLachlin, Palm Beach Post Staff Writer
Saturday, February 14, 2004
WEST PALM BEACH -- The long arm of the Internal Revenue Service stretched across the United States, then to Canada, the West Indies and all the way to Australia to snag a former Boca Raton chiropractor and radio show host wanted for tax evasion.
Living in Brisbane, Queensland, Bruce Eric Hedendal was known as Dr. Erik Hedendahl, and he had an office, a Web site and another radio show promoting holistic and chiropractic care.
Hedendal fled the United States in 2000 after a federal grand jury indicted him on charges of not paying $180,000 in income taxes from 1993 to 1995.
The IRS says he tried to hide his income and assets in sham tax-exempt trusts bought from John Philip Ellis, a Royal Palm Beach man who was convicted of tax fraud conspiracy in 2001.
With penalties and interest, Hedendal, 56, now owes the government $742,000, Assistant U.S. Attorney Steve Carlton said at the chiropractor's arraignment in federal court Friday. Hedendal pleaded not guilty to three counts of tax evasion, each carrying a maximum sentence of five years in prison and a fine of $100,000.
"He's clearly a flight risk," Magistrate Linnea Johnson said, and ordered him held without bail.
IRS agent David Keyes and U.S. Marshals Ram Ganesh and Glen Wilder made the 27-hour flight to Australia two weeks ago to retrieve Hedendal, who had been hopping around the globe for years.
Hedendal moved to Durango, Colo., in 2000 after a bitter and costly divorce in which he was ordered to pay his ex-wife $10,000 a month alimony and $4,000 a month support for four of their five children.
When he was summoned to face the tax evasion charges, he fled to Vancouver, British Columbia, then to the West Indies island of Grenada and finally to Brisbane, according to the government.
Hedendal owes his ex-wife more than $100,000, according to court records.
When Australian police arrested him on a traffic offense last June, they found he had false passports and identification cards showing him as a Canadian citizen named Ian Douglas Gillies. He was released in October, then arrested and held on a U.S. warrant until he could be extradited.
Carlton, the prosecutor, said police seized computer records showing Hedendal had offshore accounts in Latvia, the Channel Islands and the Cayman Islands. At one time, he had assets of $400,000.
The IRS has been tracking Hedendal and other purchasers of so-called tax-exempt or common law trusts since the prosecution of Ellis and five of his associates in 2001. Ellis promoted the trusts as legal ways to shield property, assets and income from taxation.
Ellis maintained that the IRS was an illegal agency and that wage and property taxes were unconstitutional. He also said Florida was not part of the United States and that federal laws applied only in Washington, the Virgin Islands, Guam and Puerto Rico.
Ellis is serving 10 1/2 years for conspiracy to commit tax fraud and obstructing a grand jury investigation. His co-conspirators received lesser sentences.
Ellis created and sold common law trusts to golf course designer Theodore McAnlis, who was found guilty of tax evasion last year and sentenced to serve more than 10 years in federal prison. McAnlis put his property and money in the common law trusts.
McAnlis, of Palm Beach Gardens, had a notable career designing golf courses, including work on Doral Country Club's Blue Monster in Miami.
As for Hedendal, he set up a trust he named Alternatives to Medicine, with himself and his mother as trustees, and gave it 95 percent ownership of International Nutrition, a dietary-supplement business that Hedendal claimed had $2 million in sales in 2000.
Thursday, February 12, 2004
FOR IMMEDIATE RELEASE
THURSDAY, FEBRUARY 12, 2004
TDD (202) 514-1888
SELLERS OF BOGUS TAX ADVICE PROGRAM
PLEAD GUILTY TO TAX CHARGES
WASHINGTON, D.C. - Two Arizona residents pled guilty today to charges they failed to report income earned from a widely marketed tax seminar program, Assistant Attorney General for the Tax Division Eileen J. O’Connor, U.S. Attorney for the District of Arizona Paul K. Charlton and Internal Revenue Service Criminal Investigation Chief Nancy J. Jardini announced.
John J. Rizzo and wife Carol A. Rizzo pled guilty to felony charges of conspiracy and to charges of willfully failing to file their income tax return. Rizzo also pled guilty to felony charges of willfully aiding and assisting in the preparation of a false income tax return and perjury before the grand jury.
“Unscrupulous tax scam promoters aggressively market a variety of fanciful schemes purporting to eliminate tax liability,” said Assistant Attorney General O’Connor. “People who promote or participate in such schemes are risking serious civil penalties, and when appropriate, criminal prosecution.”
The defendants admitted, in their plea agreements that from 1999 to 2001, Mr. Rizzo was a prominent vendor with the Institute of Global Prosperity (IGP). At seminars hosted by IGP, Mr. Rizzo promoted the Millennium 2000 Reliance Defense Program (M2K) package to thousands of people at offshore seminars and resulted in more than $4 million in sales. At an earlier court hearing, as reflected in a videotape made available to the court, Mr. Rizzo appeared at these seminars wearing judicial robes and portrayed himself as a judge and an expert on tax law.
The Rizzos also admitted Mr. Rizzo sold each M2K package for approximately $2,300.00. Additionally, they admitted they provided materials and documentation that purported to prove, among other things, that one could lawfully stop filing income tax returns and cease having income taxes withheld from personal wages based upon the long-rejected notion that the Sixteenth Amendment to the Constitution had not been legally ratified.
They further admitted they concealed the income earned from the sales of M2K packages during the period 1999 through 2002, by using a variety of dishonest and deceitful means, including the use of offshore bank accounts and third-party merchant accounts to conduct credit card sales. The Rizzos have been in pre-trial detention for the past ten (10) months.
In December 2003, Cheryl Cully, a co-defendant in the case, pled guilty to a felony charge of obstruction of justice and a charge of willfully failing to file her 2001 income tax return. Ms. Cully faces maximum potential sentences totaling six (6) years’ imprisonment, fines totaling $500,000 and liability for the costs of prosecution. Ms. Cully is scheduled to be sentenced before Judge Silver on March 29, 2004.
“The IRS continues to aggressively enforce tax laws in order to ensure a strong American economy and that all taxpayers pay their taxes,” said Nancy Jardini. “These defendants used a myriad of arguments and abusive financial arrangements to evade taxes. In this case, unlawful offshore banking used for the purpose of evading the payment of taxes has been unmasked by the financial investigative efforts of IRS special agents.”
Rizzo faces a maximum potential sentence of fourteen years in prison, ten years of supervised release, fines totaling $1,000,000, as well as liability for the costs of prosecution. Mrs. Rizzo faces a maximum potential sentence of six years in prison, fines totaling $500,000 and liability for the costs of prosecution. Judge Roslyn O. Silver of the U.S. District Court for the District of Arizona has scheduled sentencing for September 27, 2004.
Assistant Attorney General O’Connor thanked Tax Division trial attorneys Edward Groves, Larry Wszalek and Mark Odulio for prosecuting the case. She also thanked the special agents of the Internal Revenue Service whose assistance was essential to the successful investigation and prosecution of the case.
More information about the Justice Department’s Tax Division can be found at <>.
On March 5, 2003, I was indicted in New Hampshire
on 18 felony counts of violations of the internal
revenue laws. Count 1 was a violation of 26 USC
7212(a) Interfering with the Administration of the
Internal Revenue Laws; Counts 2 and 3 were violations
of 26 USC 7206(1) Filing False and Fraudulent Tax
Returns for Amended Zero Returns I filed in 1997 for
tax years 1993 and 1994; and Counts 4 through 18 were
for preparing false tax returns for others in
violation of 26 USC 7206(2). Only one of these tax
returns was prepared after I renounced Irwin Schiff's
income tax theories in early 2002.
My trial started on Friday, February 6th with the
Government presenting its case, but everyone went home
at 1:00 p.m. because of a snow and ice storm. I was
representing myself without an attorney, although
Standby Counsel had been appointed for me because I am
The Government resumed its case on Monday morning,
calling many IRS witnesses (including an undercover
agent who had attended one of my seminars in March of
2001) and 6 of my former clients, who had been granted
immunity from prosecution. (Prior to trial, the
Government had informed me that it might call upon 11
of my former clients to testify.) When I
cross-examined my former clients, each one of them
testified that I had never given them the slightest
indication that I did not truly believe what I had
told them at my seminar and thereafter. I was trying
to make the point to the jury that I had not willfully
violated the law at the times charged in the
indictment because I never believed that there was a
law making the income tax mandatory.
In the mid-afternoon of Tuesday, February 10th, I
began presenting my case to the jury. On Wednesday
morning, the judge allowed me to play the entire
video-tape of my 2-hour income tax seminar which was
recorded in 2000. In the seminar, I presented nothing
but Irwin Schiff's income tax theories.
The judge also let me introduce into evidence
Schiff's books "The Federal Mafia", "The Great Income
Tax Hoax", and "How Anyone Can Stop Paying Income
Taxes"; the transcripts, notes, and exhibits from
Schiff Audio Reports 1 through 7: Schiff's Audit, Lien
and Levy, and W-4 Packages; the Tax Court Tool Kit; my
voluminous notes of Schiff's radio shows; etc.
On Wednesday afternoon, the Government
cross-examined me until about 5:00 p.m. This morning
(Thursday), the Government and I presented our closing
arguments to the jury. The judge then gave Jury
Instructions and the jury went into deliberation. Two
hours later, the jury came back with its verdict.
Even though I had argued for two days that I had
not willfully and intentionally violated the internal
revenue laws because I did not believe that there were
any laws making the income tax mandatory, and that I
did not believe that the returns which I had filed for
myself and which I had prepared for others were false,
the jury found me guilty on all 18 counts. I asked the
judge to poll the jury members individually, which he
did. They all stated that they agreed with the
I have been out on personal recognizance bail
since March of 2003 because I am not a flight risk
(since I don't have any money) and because I am not a
danger to the community. After the jury was
discharged, the judge determined that I am still
eligible to remain free on personal recognizance bail
until my sentencing.
My sentencing will take place on May 19, 2004, at
which time I will be given free room and board by the
Government, probably for a number of years. 5, 7, 9,
11? I don't know how many, but I think that it will be
somewhere in that range.
I thought that some of you might want to know
Steven A. Swan
From: Cindy Neun
Date: Thu Feb 12, 2004 2:27 pm
Subject: Help, Please.
When I attempted to explain last week about the so-called “insanity defense” on the Fraud Penalties, that it was really a deep seeded belief and so fraud cannot apply, a suggestion of Irwin’s attorney Mr. Cohan where the Courts have ruled that there can be no fraud when this belief exists, Irwin was livid with me for commenting at all on his case. So, I called the Chancellor to have him delete the email I posted. I did not save a copy.
Since then, David Cay Johnston has reported twice that I said the defense is a ruse in that email when I did not say that.
Now Irwin has broken up with me based upon the reports of David Cay. I guess he believes that I was his slave for 5 years just to set him up to destroy his life by writing to you. Now, I will be homeless unless I receive a miracle. Irwin wants a copy of the email I sent out. I do not know why he wants it, perhaps he wants to use it as evidence against me in a Court of Law. If anyone has saved it, please forward it to Irwin. firstname.lastname@example.org
Wednesday, February 11, 2004
And to think that Bob Schulz just had Irwin Schiff as a guest speaker at his conference. Bob sure know's how to pick'em!
Judges Skeptical of U.S. Efforts to Ban a Tax Book
February 11, 2004
By DAVID CAY JOHNSTON
SAN FRANCISCO, Feb. 10 - Two federal appeals court judges on Tuesday repeatedly expressed skepticism about the government's effort to ban the sale of a book that purports to show people how they can legally stop paying income taxes, a theory that one judge called nonsense.
The two judges on the United States Court of Appeals for the Ninth Circuit, William A. Fletcher and Arthur L.
Alarcon, were even more skeptical about whether the author, Irwin Schiff of Las Vegas, can be required to give the Internal Revenue Service a list of everyone who bought his book, "The Federal Mafia: How the Federal Government Illegally Imposes and Unlawfully Collects Federal Income Taxes."
Michael Stein of Las Vegas, the lawyer for Mr. Schiff and his bookstore, Freedom Books, said that however wrong Mr. Schiff's arguments might be they were protected under the First Amendment. He compared Mr. Schiff's theories to those of abolitionists who opposed slavery in the first six decades of the 19th century. And, Mr. Stein said, giving the I.R.S. a list of those who bought the book "would have a major chilling effect" on dissent and free speech.
Mr. Schiff, 75, who has twice served prison sentences for tax crimes, is appealing an order issued in July by Judge
Lloyd D. George of Federal District Court in Las Vegas that bars Mr. Schiff and two others from selling the book. The appeals court stayed the order while it is being challenged. Under the order, anyone other than the three is free to sell the self-published $38 book.
In a separate case in Las Vegas, where the Justice Department is trying to collect $2.5 million in taxes,
interest and penalties, Mr. Schiff has filed papers by his psychiatrist, who concluded that Mr. Schiff is insane and holds a deluded belief that he alone can properly interpret the tax laws.
Mr. Schiff's girlfriend, Cindy Neun, has sent Mr. Schiff's supporters an e-mail message saying the insanity claim is a ruse intended to escape penalties on the unpaid taxes.
During the 40-minute hearing in San Francisco, Judith A. Hagley, a Justice Department lawyer, said past rulings established that "the First Amendment does not protect fraud."
Judge Fletcher, who said that the legal theories in the book were "nonsense" and "a sure way to get in trouble"
with the I.R.S., frequently interrupted Ms. Hagley. "Tell me why this is fraud," the judge asked.
Ms. Hagley said people who bought the book and followed its advice would face penalties for filing frivolous tax returns or worse.
"They market it as a how-to book," she said, reading from literature that says the book "is the starting point to legally stop paying taxes." Promotional materials say that it "explains the procedures used by thousands to legally stop paying income taxes."
Ms. Hagley said that because that contention was obviously untrue, an assertion that the judges agreed with, then the book was fraudulent.
Judge Fletcher pressed his question several ways and then observed that "the book contains nonsense - why is that fraud on the person who buys it?"
As the arguments proceeded in San Francisco, across the country in Concord, N.H., one of Mr. Schiff's former acolytes, Steven A. Swan of nearby Manchester, was on the witness stand in his criminal trial on 18 charges of obstructing the tax laws, filing false tax returns and helping others prepare false returns.
Mr. Swan testified that he sincerely believed he was obeying the law in filing returns showing zero income because he read "The Federal Mafia" and other books by Mr. Schiff. The Supreme Court has held that anyone who sincerely believes they do not have to pay taxes cannot be convicted of crimes that require a criminal intent, though they can be found guilty of lesser tax crimes and can be forced to pay the taxes.
In San Francisco, after the hearing, Mr. Schiff said the appeals proceeding was unfair.
"My lawyer can't argue the merits," he said. "No lawyer is allowed to argue the validity of my beliefs because he will be sanctioned for making frivolous arguments."
Mr. Schiff's lawyer, Mr. Stein, interrupted his client to state that "the validity of your beliefs isn't an issue," adding that there is no right or wrong to political views.
Tuesday, February 10, 2004
For Immediate Release
February 6, 2004
DEFENDANT SENTENCED FOR ROLE IN TAX EVASION SCHEME
Tampa - On February 6, 2004, United States District Judge Richard A. Lazzara, sitting in Tampa, Florida, sentenced MICHAEL J. MARICLE, age 48, of Palm Harbor,
Florida, to a term of imprisonment of thirty (30) months upon his conviction of two counts of aiding in the preparation and filing of false income tax returns, in violation of Title 26, United States Code, Section 7206(2).
MARICLE, a Certified Public Accountant in Clearwater, Florida, pled guilty to those two charges on March 5, 2003. He pled guilty to assisting two different tax payer clients in filing false income tax returns which disguised large sums of income which those tax payers had earned in 1998. MARICLE had prepared their tax returns in connection with his role as a promoter of the AEGIS system, a scheme which entailed the use of abusive trusts in order to hide income and evade the payment of income taxes.
In addition to his sentence of imprisonment, MARICLE was ordered to assist the Internal Revenue Service in the computation and collection of all taxes due and owing on the part of his two clients.
This case was prosecuted by Jay L. Hoffer, Assistant United States Attorney, Deputy Chief, Special Prosecutions Section of the Tampa Division. This case was investigated by the Internal Revenue Service - Criminal Investigation Division.
IR-2004-19, Feb. 10, 2004
IRS, STATES MOVE FORWARD IN FIGHT AGAINST ABUSIVE TAX AVOIDANCE
WASHINGTON - Internal Revenue Service officials announced today that they have started sharing leads on more than 20,000 taxpayers engaged in abusive tax avoidance with tax agencies in 45 states, the District of Columbia and New York City. The IRS also announced today the latest results of another effort to combat abusive tax avoidance, the Offshore Voluntary Compliance Initiative (OVCI).
The sharing of leads was the first large transfer of information under the terms of the new IRS-state partnership unveiled in September. More than 20,000 audit leads and other information have been shared with the states, and more information will be shared in the future.
"Combating the use of abusive tax avoidance schemes by high-income individuals and others is a top enforcement priority," said IRS Commissioner Mark W. Everson. "Coordinating our casework and sharing leads with the states is an important way to extend the reach of the IRS and help the states."
Under the terms of the partnership, IRS and the cities and states coordinate efforts to address common compliance concerns in the area of Abusive Tax Avoidance Transactions (ATAT) by working in tandem and avoid repeating each other's efforts.
"The states and the IRS routinely share information, but the ATAT program presents us with an exceptionally fertile opportunity to help one another," said Stephen M. Cordi, Deputy Comptroller for Maryland and president of the Federation of Tax Administrators, an association of the tax agencies in all states, D.C. and New York City. "These abusive shelters are hidden through many layers of business transactions and money shifts. Each agency may have a few pieces of that puzzle but by working together we can fit it all together for the benefit of taxpayers."
The initial leads transferred to states involved scams using offshore transactions, abusive trusts, employee leasing, home-based businesses, employment taxes and other tax-avoidance schemes. The IRS, states and cities will subsequently share information on any resulting tax adjustments from the audits allowing them to piggyback on the results of each other's work. The process allows the agencies to leverage resources by greatly decreasing the possibility of two or even three tax agencies performing a lengthy examination of the same taxpayer.
The cities and states that have signed partnership agreements and that received information include: Alabama, Alaska, Arizona, Arkansas, California, Colorado, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, New Hampshire, New Jersey, New Mexico, New York City, New York State, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Virginia, Washington, West Virginia and Wisconsin.
The IRS also announced today the latest results of its Offshore Voluntary Compliance Initiative (OVCI). More than 1,300 taxpayers applied to OVCI and so far the initiative has yielded more than $170 million in taxes, interest and penalties to the U.S. Treasury. In addition, the effort led to obtaining the names of 479 scheme and scam promoters. Nearly half of these promoters were previously unknown to IRS investigators.
Under the terms of this 2003 initiative, taxpayers came forward, amended their returns, paid taxes, interest and penalties and furnished the IRS with information regarding the person who promoted the offshore arrangements to them. Interested persons had from January 14 to April 15, 2003 to step forward. If accepted by OVCI, eligible taxpayers could avoid criminal prosecution and some penalties.
State governments will also benefit from OVCI under existing information-sharing agreements. State tax administrators will be able to make use of the information voluntarily given by taxpayers to the IRS.
"Our coordinated efforts will continue to serve as a catalyst to strengthen overall tax administration at the federal, state and local levels," said IRS Small Business/Self-Employed Commissioner Dale F. Hart. "This effort maximizes our efforts to stretch our resources as we continue to combat the proliferation of abusive tax transactions and schemes."
New York and California tax officials praised the ongoing partnership.
"Working with the IRS and other states, New York has stepped-up efforts to identify and prosecute companies and individuals who promote or engage in abusive tax shelter schemes," said New York State Department of Taxation and Finance Commissioner Andrew S. Eristoff. "The information-sharing process under the partnership will allow us to save resources and accelerate our efforts."
"With federal and state officials cracking down on illegal tax shelters for multi-millionaires, Californians will be better assured that everyone pays their fair share," said State Controller and Franchise Tax Board Chair Steve Westly.
IRS Auditing to Get Tougher under New Boss
Publication: San Jose Mercury News, Calif.
Date: Feb 8, 2004
Author: Mark Schwanhausser
Feb. 8--The Internal Revenue Service's new boss has revised the tax-collection agency's mission: to be kinder, gentler -- and tougher.
Saying that cheating has jumped alarmingly since the IRS sacrificed enforcement to make the agency more taxpayer-friendly in the '90s, new commissioner Mark W. Everson is heading into his first tax-filing season determined to reverse plunging audit rates, beef up enforcement and scare tax cheats straight.
Honest taxpayers are likely to have more reasons to cheer than to fret about such tough talk. IRS audit rates have plunged dramatically the past decade, and Everson says they might not ever rebound to previous levels. Everson also pledges that putting more cops on the beat won't set back improvements in taxpayer service that earned it a reputation as the "kinder and gentler" IRS.
But the new tone could rattle the IRS's top targets: wealthy tax cheats, tax-evading corporations and crooked tax preparers.
"You do need that trooper under the bridge every few miles...to deter those folks who would willfully violate the speed limits and to convince others driving lawfully that those who break the law will pay the price," said Everson (whose name is pronounced EVE-er- son). "You can't let people feel like chumps if their neighbor down the street is getting away with something."
Critics remain skeptical, however. Audit rates and other enforcement activity have plummeted so low, they say, that the statistics have nowhere to go but up. The agency still needs to upgrade its computer systems. And the IRS continues to struggle to attract, train and retain top-notch auditors.
"No matter how aggressive you want to be, if you don't have the horses you can't do it," said Robert E. McKenzie, a tax attorney with Arnstein & Lehr in Chicago.
But nine months into Everson's five-year term there's mounting evidence that his get-tough growl could have bite:
-- In headlines, the agency has launched pilot audits aimed at offshore tax shelters, the earned-income credit fraud and other suspect tactics. For one, the IRS has selected two dozen corporations to examine how they handle stock options, deferred executive compensation and a variety of other executive pay practices. In addition, the agency has launched more than 100 examinations of tax-shelter promoters, seeking lists of investors it can target.
-- In court, the IRS is taking on prominent accounting and law firms that marketed tax-shelter schemes, including KPMG, BDO Seidman and Jenkens & Gilchrist. And last month, it succeeded in disbarring San Jose certified public accountant Joseph R. Banister, a former IRS criminal investigation agent who advised clients that income taxes are unconstitutional.
-- And behind the scenes, Everson has moved to reshape the IRS. In January, he unveiled a plan to close or consolidate a number of back-office functions and use the savings to hire more auditors and collection officers. In December, he appointed a tough-minded watchdog to police unscrupulous accounting firms and tax preparers, and doubled that department's budget. And last year, the IRS reached an important pact with California and 41 other states to coordinate the hunt for tax-shelter cheats.
It's too soon to measure the impact of such moves statistically. But many tax-industry experts report that the IRS is ratcheting up audits slightly, chasing unpaid tax bills harder and getting stingier with taxpayers who claim they can't afford to pay their full bills.
"The pendulum has swung in the other direction," said Claudia Hill, a Cupertino tax preparer and editor in chief of the Journal of Tax Practice & Procedures. "The IRS left a lot of money on the table. They've started that process up again."
Everson's new attitude reflects the changing political climate and increased need for tax revenues, experts say. In contrast, the previous commissioner, Charles Rossotti, was charged with focusing a demoralized agency on taxpayer service during a flush economy. Enforcement scaled back in the wake of withering congressional hearings into IRS abuses, the passage of a taxpayer "bill of rights" and an order to root out overaggressive auditors and collection agents. Rossotti's restructuring also focused the shrinking agency on organizational charts, not tax cheaters.
Everson lauds the reforms under Rossotti. Still, he said, "that drawdown happened at exactly the wrong time" because it opened the door to Enron-style scandals, an explosion of tax-shelter scheming and a new wave of taxpayers who are willing to risk playing audit roulette.
Amid the upheaval, enforcement plunged. The odds that an individual taxpayer would endure a face-to-face audit dropped 76 percent from 1992 to 2002, according to the most recent figures the IRS has released to Transactional Records Access Clearinghouse. Audit rates for wealthy taxpayers with at least $100,000 of income plunged from 2.9 percent to 0.38 percent.
Saying that wealthy golfers are more likely to get hit by lightning than be prosecuted by the IRS, tax attorney McKenzie joked, "God is a better shot than the IRS."
Moreover, the agency's three favorite collection tools fell into relative disuse after the congressional reforms in 1998, IRS statistics show. The number of liens fell off 38 percent by 2002. Levies plunged 75 percent. And the seizure of assets all but stopped
-- dropping 97 percent from nearly 11,000 in 1995 to just 364 in 2002.
But the statistic that bothers Everson more than most comes from an IRS opinion survey of taxpayer attitudes. In 2003, more than one of every six taxpayers said they think it's OK to cheat on their taxes, up from one in nine just four years earlier.
"That's a very dangerous trend line," Everson said. "You can't sustain that kind of increase and still fund the government or not suffer a very real erosion of the law."
Monday, February 09, 2004
Sunday, February 08, 2004