Tax protester trial begins

Fort Worth Star-Telegram ^ | 1/6/2005 | Max Baker

[sinkspur]

FORT WORTH - Anti-tax protesters from across the country braved a chilly reception inside and outside the federal courthouse Monday when Bedford businessman Richard Simkanin went on trial for the second time on charges of violating U.S. tax laws.

U.S. District Judge John McBryde closed the courtroom during jury selection. About 100 of Simkanin's supporters were ordered to leave the fourth floor of the courthouse while they waited for trial testimony to begin.

Simkanin, the 59-year-old owner of a small Bedford plastics manufacturing company, is accused of failing to withhold and pay $175,000 in taxes on employee wages and of filing 15 fraudulent refund claims for about $235,000.

Prosecutors also accuse him of failing to file individual tax returns.

His refusal to pay the federal taxes -- and in general to reject the state and federal governments' authority over him -- has made Simkanin a hero and a martyr in what is known nationally as the "tax honesty movement."

"We just want the people of Fort Worth to know we are supporting this man," said Lewis Cosby of Kerrville, who stood in the cold outside the courthouse with a banner that read "Stop Judicial Tyranny."

This is the second time Simkanin has gone on trial. In November, McBryde declared a mistrial after jurors deliberated for eight hours before saying that they were deadlocked and could not reach a verdict.

The first trial came only after a plea agreement Simkanin signed was thrown out because of a technical error. The initial agreement misstated the maximum possible sentence he could receive as three years instead of five.

Since then, tax protesters have rallied around Simkanin's cause, calling him a patriot. They even bought a billboard a few blocks from the federal courthouse, asking McBryde to free Simkanin in the name of the Constitution.

On Monday, prosecutors put 11 witnesses on the stand -- including Simkanin's sister-in-law Dianne Clemonds -- to try to show that Simkanin knew what he was doing when he stopped withholding and paying taxes on employee wages.

Clemonds said she worked at Simkanin's company, Arrow Custom Plastics, for 11 years, including as an accounts payable clerk. Eventually, she became aware that Simkanin had decided not to pay the income taxes.

She testified that Simkanin made her "president" and put her name on the bank accounts and credit card bills because he didn't want to sign any legal documents. Simkanin "didn't want to be part of the system," she said.

Clemonds testified that she resigned because she didn't want the responsibility and that she "wasn't going to go to jail for him."

Accountants James Kelly and Fred Taylor said that they repeatedly warned Simkanin that his approach to filing his taxes would get him into trouble. Eventually, they said, they refused to prepare his business and personal tax returns.

"He did not believe the Internal Revenue Code applied to him," Taylor said. "I told him it did and that he would get into a lot of trouble."

Prosecutors also put Internal Revenue Service agents on the stand to bolster their argument that Simkanin intentionally broke the law. Under federal tax laws, ignorance of tax codes can be used as a legal defense.

McBryde kept a tight rein on the questions asked by the prosecutors and especially on those posed by defense attorney Arch McColl of Dallas.

McBryde has compared the tax honesty movement to a cult. He also ordered that Simkanin be kept in jail after an informant told him that Simkanin had threatened to kill federal judges.

When McColl tried to query witnesses on legal definitions of employee and wages, McBryde cut him off. When McColl asked whether Social Security taxes were mandatory, McBryde sternly said: "We're not going to play this game."

Once, when Simkanin's supporters laughed at the treatment McColl was receiving, McBryde sent the jury out of the room and then told the crowd that he would clear the audience if there was another "outburst."

"We're in a court of law, but we can't talk about the law," said Mike Owens of Denver during a courtroom break.

Vicki Ariatti, also of Colorado, said she was disgusted by the proceedings.

"This is his life, and he can't defend himself with the code book and that is where the law is -- in the code book," Ariatti said.

The trial will continue at 8:30 a.m. today in McBryde's courtroom in the federal courthouse at 10th and Lamar streets.

[sinkspur]

This guy should settle. The trials will continue until this crook goes to jail.

But, these goofy tax protesters never seem to learn.

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[2banana]

He should just say that he is 1% indian and that his factory sits on a reservation. In fact, a tax-free casino will be coming to the factory quite soon...

[TaxPayer2000]

and in general to reject the state and federal governments' authority over him --

very CHILLING words, whatever happened to "We the people"???? Obviously this statement came from one that believes that authority comes first from the Fed, then to the states etc.. in theory, our government is to submit to the authority of the governed

[sinkspur]

Nah. This crook was putting his employees' names on checks.

IOW, he KNEW he was breaking the law, and was exposing his workers to liability.

[TaxPayer2000]

The trials will continue until this crook goes to jail.

remember the phrase "innocent untill proven guilty in a court of law"?

[AppyPappy]

It sound like he was trying to get around the system, not fight it.

[AppyPappy]

There is no such phrase. Try again. You are either innocent or guilty regardless of what the court says.

[sinkspur]

remember the phrase "innocent untill proven guilty in a court of law"?

The guy already pled guilty; his deal was overturned on a technicality.

He's guilty.

[Jason_b]

link to the givemeliberty article

[stylin_geek]

...failing to withhold and pay $175,000...

This line makes it look like his employees didn't have anything taken from their checks. If he would have withheld the money, then spent it, then I would really have a problem with his actions.

She testified that Simkanin made her "president" and put her name on the bank accounts

But, then we get this line, and it certainly seems like he was setting up someone else to take the fall.

I'm not sure we're getting an accurate picture of what is going on from this article.

[sinkspur]

When is big fat Bob Schulz gonna put his butt on the line?

McColl is not getting away with putting the law on trial, this time.

Simkanin is going down.

[Jason_b]

"In that trial, an IRS legal expert had to recant his prior testimony regarding the definition of the critical legal term “employee[,]” and the judge refused, after a specific request by the jurors, to provide them with a copy of the law that required Simkanin to withhold."

Why should the judge be so secretive? Oh wait, the legal system is filled with legal "high priests" who can tell us what the law reads and we don't have to worry our pretty little heads over it. Well now it looks like the average citizen wants to debate what the law reads with the high priests themselves. This is long overdue in my opinion. Blackstone himself said that all free men should devote some time to the study of law as part of a liberal education. The law is for the protection of all the people so therefore all the people must be involved in understanding and arguing the law. This idea that only trained professionals from law schools can understand the law is what is behind the loss of liberty for the average citizen and the establishment of a judicial and legal oligarchy.

[Bikers4Bush]

Wasn't there a pilot for FedEx or somtehing that managed to beat the feds in court recently over the legality of the income tax statutes? I remember reading an article here about it.

[William Terrell]

McColl is not getting away with putting the law on trial, this time.

In your opinion, is there any law which should be put on trial?

[citizenx7]

He did NOT plead guilty. He said he would accept a compromise offered by the government, which was later rejected because the feds made a mistake in writing the document.

Remember that two grand juries, that were able to interview Mr. Simkanan, would not indict him! He was only indicted when the feds prevented him from coming before the grand jury! At his trial, the jury voted 11 to 1 for him, when the feds would not provide information on the exact statutes that he violated! Statues that say that he, as an employer must act as a uncompensated agent for the government. They want him bad, but they have no case! Thats why they lose, because most people can see that they are trying to railroad him into a conviction. Fraud is evident in this case, and it is being conducted by the government.

[looscnnn]

When McColl tried to query witnesses on legal definitions of employee and wages, McBryde cut him off. When McColl asked whether Social Security taxes were mandatory, McBryde sternly said: "We're not going to play this game."

Questions that need to be answered. If the "employees" actually sub-contractors or contrators, thus no need to withhold taxes. That would put the tax accountablility on the individual "employee". Given that he did not withhold the money, I would think that is the way that it was being worked. At the end of the year what form did they get, W-2 or 1099? What about the responsibility of the individual "employees" for the taxes not being paid? If they filed their taxes and they have not had anything withheld, they are responsible for the bill.

[zeugma]

McColl is not getting away with putting the law on trial, this time.

What a shame, if true. Every law should always be on trial. Just laws will be upheld by juries. With any luck, insane ones will not.

[GluteusMax]

ping

[Pern]

Thats why they lose, because most people can see that they are trying to railroad him into a conviction. Fraud is evident in this case, and it is being conducted by the government.

The Fed's will get their pound of flesh, because the little guy cannot overcome the awesome resources of the state. That's how the crooks (IRS) have been able to get away with it for so long. As soon as someone protests or points out flaws, he is crushed by the state.

That doesn't fly with the Constution I swore to defend.

I wonder if it's too late to try to make fair taxation a campaign issue for Nov.

[citizenx7]

"There is no such phrase. Try again. You are either innocent or guilty regardless of what the court says."

Yes, and then there is the variation on your phrase:

Sometime the court is wrong.

[looscnnn]

I am looking for the article on who did that, but in the mean time here is an interesting article.

http://www.geoffmetcalf.com/qa/22255.html

[AppyPappy]

If the employees act as employees, you have to withhold taxes for them. That is the law. You can't call employees "contractors" to skirt the law.

[AppyPappy]

Exactly. That is why the phrase "innocent until proven guilty" is invalid. You are either innocent or guilty. I think they meant "presumed innocent until proven guilty" which only applies to the courts.

[sinkspur]

He said he would accept a compromise offered by the government, which was later rejected because the feds made a mistake in writing the document.

A "compromise" in which he goes to jail for three-to-five years? Please.

[looscnnn]

Were you thinking of Irwin Schiff?

[Mmmike]

Why can't we just flaunt the tax laws by calling them "behind the times"? After all, there are deacons who use the same excuse to say "screw you" to Church authority.

[sinkspur]

Why can't we just flaunt the tax laws by calling them "behind the times"? After all, there are deacons who use the same excuse to say "screw you" to Church authority.

I'm unaware of any deacons who do that.

[Bikers4Bush]

I recieved this link via freepmail, my thanks to the sender.

http://www.freerepublic.com/focus/f-news/961901/posts

[William Terrell]

If you think taxing at the source of income can be abused, wait until there is taxing at the spending of income.

[looscnnn]

If the employees act as employees, you have to withhold taxes for them.

I have been a contractor many times and acted as an employee, they never withheld taxes. At the end of the year I got a 1099. So define "act as employees". If you mean they do work for you, that won't cut it. Like I said, asking them to define an employee is a valid question.

[looscnnn]

Did not catch that post. Wonder where she got the info to start filling the paperwork out? Wonder if it was Irwin or one of the other peoples books? Like to find out, I could use the money myself. Just need to use that case as precidence if taken to court.

[AppyPappy]

In other words, if there is no discernable difference between you and an employee, you must withhold. If the company supplies you with a desk, a computer, a phone and a gives you access to everything that an employee uses, you must be treated as an employee of the company. This is to prevent companies from firing their staff and rehiring them as independent contractors.

If you work for another company as a contractor, this does not apply.

[RGSpincich]

Simkanin, the 59-year-old owner of a small Bedford plastics manufacturing company, is accused of failing to withhold and pay $175,000 in taxes on employee wages and of filing 15 fraudulent refund claims for about $235,000.

Then there is the small matter of only believing in the "refund" statutes of the tax code. Scamman is going down.

[Bikers4Bush]

Contractors act as employees all the time but you' don't have to withold taxes from them. Programmers are a perfect example.

They act on behalf of and in some cases even negotiate on behalf of companies but they still aren't employees. They are contracted to work for an hourly wage or a set fee and it's up to them to pay those taxes.

[N. Theknow]

Statues that say that he, as an employer must act as a uncompensated agent for the government.

Uncompensated agent, eh?

Consider this - business owners in Connecticut must collect sales tax for items sold not only in Connecticut but also Massachusetts, Rhode Island and New York state. And to top it off, each county in New York state has its own tax rate.

Company bookkeepers spend at least one day a month doing just sales taxes.

[AppyPappy]

Actually you do. It's just rare that companies do that. We got nailed for it at Sara Lee when I was in Payroll. That's why many big corps refuse to hire independents.

[looscnnn]

I was supplied all the things you listed, I did not work for another company and I worked as a contractor. There was not set amount of time I was needed. I was eventually asked if I would like to become an employee, but that was after almost 15 months of work. Again, that is not a quality answer for what the definition of employee.

[looscnnn]

Did he file the refund claims or did the employees? If the employees did, would that not fall on their shoulders?

[William Terrell]

Hey, you missed commenting on the rest of his post to you. It was :

"Remember that two grand juries, that were able to interview Mr. Simkanan, would not indict him! He was only indicted when the feds prevented him from coming before the grand jury! At his trial, the jury voted 11 to 1 for him, when the feds would not provide information on the exact statutes that he violated! Statues that say that he, as an employer must act as a uncompensated agent for the government. They want him bad, but they have no case! Thats why they lose, because most people can see that they are trying to railroad him into a conviction. Fraud is evident in this case, and it is being conducted by the government."

Possibly, you just write this off as "tax protester" fiends infesting grand juries? What.

Incidentally, I'm still curious as to your thinking on the law matter. You haven't answered my question, though you must have been presented with it through the FR posting alert system.

In your opinion, should any law be "put on trial", as you say? Or, do you think that if a law makes it, through hook or crook, extortion or fraud, through the legislative body, all citizens must submit to it regardless?

Do, please, share your thoughts on this issue.

[looscnnn]

Now think about what the internet stores are going to go through when dealing with sales tax for the entire nation.

[AppyPappy]

I'm just telling you the law.

[AppyPappy]

BTW guess which Court of Appeals came up with this ruling?

[AppyPappy]

http://library.lp.findlaw.com/articles/file/00073/001675/title/Subject/topic/Labor%20%20Employment%20Law_Employment/filename/laboremploymentlaw_2_81

[Bikers4Bush]

We have literally 80+ programmers that are contractors. We do not withold for a single one and have never had the feds so much as look at us sideways about it.

Many of them have been here working under this arrangement for years on various systems and they are all dedicated to us full time.

[AppyPappy]

From the link below

In 1989 and 1990, the Internal Revenue Service audited Microsoft''s books and decided that as a matter of law the "freelancers" were employees for employment tax purposes rather than independent contractors. After the IRS made this determination, the freelancers claimed they were entitled to participate in Microsoft''s employee benefit plans. Microsoft disagreed, and the freelancers then asked Microsoft''s plan administrator to determine if they were eligible for these benefits. Not too surprisingly, Microsoft''s plan administrator determined that the freelancers were ineligible.

[AppyPappy]

Link above. Sorry

[AppyPappy]

On the other hand, the IRS is more likely to classify as an employee a contractor who:

can be fired at any time by the hiring firm
is paid by the hour
receives instructions from the hiring firm
receives training from the hiring firm
works full time for the hiring firm
receives employee benefits
has the right to quit without incurring liability, and
provides services that are an integral part of the hiring firm's day-to-day operations.

[Cultural Jihad]

Hey, it's a free country. He is free to try to scam his society, and the members of society are free to try him in a court of law. He is free to defend himself, and the members of society are free to prosecute him. He is free to whine about the consequences of his freewill actions, and the members of society are free to impose societal consequences upon him. Everyone is free!

[Middle Man]

"Just laws will be upheld by juries."

This article is significant only in what it doesn't say about the Simkanin case.

His first trial in November ended in a mistrial with the jury hung 11 to 1 FOR ACQUITTAL.

The prosecutor refused to let Simkanin testify before the grand jury that reindicted him and the judge has barred all the exhibits Simkanin used in his defense the first time that convinced the jury he was telling the truth and the GOVERNMENT WAS LYING.

Simkanin was not allowed to do the minimum 30 days of discovery on the 4 additional charges the government added to the indictment, in flagrant violation of the federal rules of criminal procedure.

The government is still smarting from getting its a*s waxed in the Vernice Kuglin trial and it doesn't give a flip about due process, habeas corpus or the Bill of Rights.

The prejudicial comments "Judge" McBryde has made about this case should disqualify him from sitting within a mile of this case, but he's a perfect example of how the judicial branch has become the kneeling boy of the federal prosecutors. Every one of these buttoned-down and bat-suited crooks took an oath to defend the Constitution and see JUSTICE DONE, not "win the case at all costs".