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."
Yeah, that is their big stumbling block. It’ll be interesting to see how it shakes out.
This case should have been outright Dismissed upon the Production of Evidence (Legal Tender). Nobody is required to accept Federal Reserve Notes for Anything. The Constitution states that only Gold and Silver Coin is Legal Tender. Federal Reserve Notes require the “legal Tender” as a qualifier pursuant to Federal Law. Now to all the Legal Geniuses out there which is Supreme? Constitution or Federal Statute?? Yes we here all know the answer. Finding a Judge who can actually read the Constitution for what it says, next to impossible, All Juries should have a copy handy to determine whether or not the law is Constitutional.
The Jury has the absolute right to judge the LAW as well as the Fact in Controversy.
This will be a long and complex case, involving some knowledge of basic addition and subtraction. I hope the defendant has a smart lawyer who excuses jurors who are public school graduates, government employers or democrats.
That’s no reason to permit it when it’s under legal argument. I’m not aware of any Constitutional amendment stating that anything in the tax code is beyond Constitutional/logical review just because it made it in there.
So if I go to the local stop-n-rob to pick up a loaf of bread and Apu gives me my change back and it turns out that the half-dollar he gave me turns out to be a 90% silver coin...
...should I have to report that as income?
absurd
I think the IRS thinks you do. So, no.
I had a friend who inherited a business when his dad died, so inheritance taxes were due. Unfortunately business was down, so the business was all capital, no money, so no money to pay the taxes. Well it got pretty ugly, the business shut down, and the IRS was garnishing the guy's wages after he went to work for another company. So he's battling with the IRS over his living expenses, like for example they thought he was spending too much on electricity. Well about the only way to save on electricity in Arizona in the summer is to go without AC! Anyway so the guy was scrappy and fought the IRS every step of the way, refusing to allow them to define the issues and get on with negotiating how bad he was going to get screwed. For instance one time they were threatening to do something painful and punitive he didn't like and he said "Well, if you do that I'll just go on welfare", to which the IRS guy said "Well sure, if you're going to be like that about it!" !! When the guy told me about it, I said it should be illegal for anyone from the IRS to use that phrase.
No, but parties in civil litigation are often forbidden from arguing contradictory theories.
This is criminal.
I know, so even more important that they should not be allowed to persecute, er, prosecute him based on a law that is internally contradictory. The standards for criminal prosecution are normally HIGHER than civil, burden of proof and so on. Also, the government should be held to a HIGHER standard than a civil litigant. They’re the government. They should have to pick one interpretation publicly and stick with it, not which ever one produces the results they like in this particular case. That’s the same as having no law at all and they just prosecute you cause they can. Now I’ll admit that issues like this are supposed to be handled on appeal, but aside from that, this is my opinion and I’m sticking to it.
When King Franklin the First (Franklin D. Roosevelt) took over, he individually FORCED those holding Gold coins or bullion to turn it in ...
On April 5, 1933, Roosevelt signed Executive Order 6102, which ordered people to turn in their gold to the government at payment of $20.67 per ounce.
Personally, I hope this guys beats the snot out of the IRS, since I do think the "legal tender" argument puts the IRS in a box, but we shall see.
Correct. But, as far as I can tell, the federal government is not on trial. ;)
The attorney here should find out if the IRS has accepted these coins at face value for payment.
I support the businessman.
“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.””
You might be a sheeple but if the guy was within the law he was within the law. You’re not much help to this country at all if you think we should just drag each other down with us.
“The attorney here should find out if the IRS has accepted these coins at face value for payment.
“
Excellent point. If the IRS wants to say a coin is worth far more than face value in once case then they must accept that value in others. I wonder how many people have been screwed when the IRS took gold and silver coins for payment at face value.
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