Posted on 05/29/2009 8:45:44 AM PDT by ameribbean expat
Robert Kahre, who owns numerous construction businesses in Las Vegas, is standing trial on 57 counts of income tax evasion, tax fraud and criminal conspiracy. If convicted on most counts, he could live out his life in prison.
But attorney William Cohan paints Kahre as an American "hero" who believes his payroll system helped keep the U.S. monetary system sound, and was also a form of legal tax avoidance.
A self-made entrepreneur, Kahre, 48, paid his workers in gold and silver coin, and said they could go by the coins' face value -- rather than the much higher market value of their precious metal content -- for federal tax purposes. He did not withhold taxes from their wages, and he provided the same payroll system to 35 outside clients, which were other local businesses.
Judge David Ezra is presiding over the criminal trial, which began May 19 in U.S. District Court. Joining Kahre as defendants are his longtime girlfriend, a sister who works in his businesses, and a former business assistant.
Three of the four present defendants were among the nine people tried on similar charges two years ago, but no convictions resulted. In the 2007 trial, four others of the nine defendants, including Kahre's mother, were entirely acquitted. Two individuals were only partially acquitted, but dropped from the indictment that forms the basis for the trial before Ezra.
This time around, the only new defendant is Danille Cline, Kahre's girlfriend of 19 years, and the stay-at-home mother of his four children. The government claims she obstructed the Internal Revenue Service by allowing Kahre to place several homes in her name, thus attempting to conceal his assets.
Cline's former brother-in-law, Thomas Browne, also was indicted this time, for his role as broker in some of the real estate transactions, but has since reached a plea bargain. He is expected to testify against the defendants.
"This is a case about money, greed and fraud." The line appeared on screen in court during the government's opening statement by Christopher Maietta, a trial lawyer from the Washington, D.C., office of the Department of Justice.
According to the government, Kahre and others concocted a fraudulent cash payroll "scheme" and then peddled it to other Las Vegas contractors. Defendants did not report to the IRS any payments made to workers, "either at the true amount or at the bogus amount, ... being the face value of the coin or coins," according to the indictment.
The now-suspended payroll service handled about $114 million over six years, according to court records. Between 17 and 25 percent of that went to Kahre or his workers; the rest went to the 35 client businesses to pay their workers, court records show.
The government did not indict most of the outside businesses or their personnel as co-conspirators with Kahre; although on May 6, Daniel McCartan of Action Concrete, which was one of Kahre's payroll clients, was finally sentenced in connection with a plea agreement reached in December 2006. McCartan received five months in prison and five months of home detention for one count of tax evasion.
Kahre contends his workers had agreed to be independent contractors, so he did not have to withhold taxes for them. His six businesses are in the trades of painting, drywall, tiling, plumbing, heating-cooling and electrical work.
Further, the $50 gold coins and the silver dollars Kahre used for payroll are designated by Congress as legal tender, so people are entitled to value them at their stamped denominations, he also contends. Taken at face value, each defendant's annual coin income placed him below the threshold for filing a federal tax return.
Earlier cases on the question of how to value gold or silver coins have focused on collectible coins that had been pulled from circulation but still have value as property, according to the defense. Kahre used coins minted after 1985, which are allowed to circulate.
"It's not whether what Mr. Kahre did was legal under the law," defense attorney Michael Kennedy told the jury in his opening statement. "It's whether he believed what he did was legal," in the absence of explicit instructions by the IRS -- on its Web site, in its publications or in response to written correspondence from Kahre -- on how to value post-1985 gold or silver coins.
"We're not here to determine if moneys are owed," said Kennedy on behalf of his client, Lori Kahre, who had relied on her brother's tax theory. A tax mistake is different from a tax crime, so the IRS can still use administrative channels to force the defendants to pay back taxes, Kennedy has noted in the past.
A sincere, but mistaken understanding of the tax-filing process is different from adopting a "pretextual" belief system in order to dodge taxes, Ezra acknowledged in court Wednesday.
Cohan described Kahre's payroll system as a "boycott of the Federal Reserve." But when the lawyer attempted to elaborate on Kahre's view that the nation has debased its paper currency by abandoning its former gold standard, Ezra added, "We're not here to convince the jury that the ... (U.S.) monetary system belongs to an international cabal."
Interesting crime...
The gold coin's intrinsic value is $1000 (about); the face value is $50.
IF the IRS says that intrinsic value is the true measure, then what is a paper $20 bill worth? About 5 cents.
IF the IRS states that face value is the determinant, then what are they going to say, that the US Mint is counterfeiting money?
Either way, if they argue face value vs. intrinsic value, they lose.
They can argue it is worth the higher of the two.
Gestapo losing with the Judges on their side? Wow...that would be something.
The real story is that these days, many more patriotic Americans are thinking: “good job!” and not: “pay your taxes like the rest of us.”
are the gold coins lawful money? if so, the face value
should determine. Otherwize they are worth what the market
says they are worth.
>> “This is a case about money, greed and fraud.”
It sure is.
Thats EXACTLY what I’m thinking. I’m also thinking: “I hope he wins”, because if he loses, FPMITAP is what they’ll give him...Not good.
Is it a crime?
If you give me a $100 Gold coin that’s legal tender, the gold in the coin may have a value far and above $100... but as far as legal tender its worth $100. Is the Federal Government going to argue that is own legal tender is not legal tender?
I mean the rule of law means nothing anymore anyway, but still... think about it a bit.
I don't expect the government to actually be fair and use logic, but this is the way it should be argued and the way it really is.
IMO, the income tax should be done away with, there is a reason the founders made them unconstitutional. It was a sad day for this country when the citizens allowed the constitution be amended to allow an income tax.
I don't agree. I can't see how they can attack this without further legislation, if if it IS legal, any guidance on the IRS website has no legal bearing on anything. IANAL. Now, since he's saying that for legal purposes he was paying people at the face value rate, they might be able to get him for paying people less than minimum wage, calculated on the face value, but if they're 1099 contractors, he can probably dodge even that.
Yes they could; but, how do you get around this
From the Article Further, the $50 gold coins and the silver dollars Kahre used for payroll are designated by Congress as legal tender, so people are entitled to value them at their stamped denominations, he also contends. Taken at face value, each defendant's annual coin income placed him below the threshold for filing a federal tax return.
The judge shouldn't allow that. They shouldn't be able to have it both ways.
I’ll bet at least one out of twelve randomly selected people off the street would vote to acquit this guy. Here’s hoping the jury is randomly selected.
Yep.
But ultimately, barter is easier. You can’t render unto Caesar that which is not Caesars. His face is on the money, but not on the goods we swap.
It should be taxed at whatever value the bank would credit to your account.
When the British empire declared that it's Gold Sovereign was no longer legal tender, the price of gold was such that a counterfeiter in Italy was able to profitably produce "British Sovereigns" containing more gold than actual Bristish Sovereigns.
And that counterfeiter got away with it ...
From Wikipedia, at http://en.wikipedia.org/wiki/Sovereign_(British_coin) , we have …
Sovereigns were produced in large quantities until World War I, at which time the UK came off the gold standard. From then until 1932, sovereigns were produced only at branch mints at Melbourne, Sydney, Perth, Bombay, Ottawa, and Pretoria (except for some in 1925 produced in London as part of Winston Churchill's ill-fated attempt to return the UK to the gold standard). The last regular issue was in 1932 (at Pretoria).
Production resumed in 1957, ostensibly to prevent the coin being counterfeited in Syria and Italy.[5] Subsequent publication of treasury papers appear to indicate that sovereigns were widely used in pursuance of British foreign policy in the Middle East, and it was felt that the coin could not be allowed to fall into disrepute, as many individuals were receiving payments in the form of sovereigns for services rendered to the British government.
Have you looked at the tax code? They’ve got hundreds of things both ways.
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