Tax denier / tax shelter cheater convicted

[Demosthenes]

FOR IMMEDIATE RELEASE TAX
TUESDAY, JUNE 3, 2008
http://WWW.USDOJ.GOV

FORMER SKYDIVING COMPANY OWNER AND EX-HOUSTON AUTO EXECUTIVE CONVICTED OF TAX CHARGES
Auto Executive Turned Tax Defier Failed to Pay Approximately $1 Million in Taxes

HOUSTON - After a four-day bench trial in the Southern District of Texas, U.S. District Court Judge Lynn N. Hughes today convicted Madison Lee Oden of filing false tax returns for tax years 2000 through 2002, the Justice Department announced. Judge Hughes also convicted Richard D. Davis of aiding or assisting in the preparation of these same false tax returns. Oden is a former high-level executive with Sterling McCall Automotive Group in Houston, and Davis is a former owner of Skydive Houston in Waller, Texas.
According to the indictment returned in October 2006, Davis purported to run his skydiving business through various partnerships, including Skydive Houston LLC, Skylakes Aviation LLC, and Aircraft Aloft LLC. Davis also prepared tax returns and provided financial services for clients out of his home in Spring, Texas. He performed these services under various business names including R.D. Davis & Associates, R.D. Davis Investments, and Financial Management Services.
As the evidence during trial established, Oden used Davis to prepare his tax returns beginning as early as 1991. In response to an audit of his 1993 tax return, which Davis prepared, Oden refused to cooperate and instead sent frivolous correspondence to the Internal Revenue Service (IRS). This audit resulted in a tax liability of $74,000, which Oden paid in 1997.
The evidence also established that, for tax years 1998 through 2002, Oden made purported “investments” to Davis of approximately $340,000 in exchange for fraudulent losses on his income tax returns. The losses on Oden’s 1998 through 2002 tax returns were similar to the losses that were disallowed during two previous audits of his tax returns. During tax years 1998 through 2002, Oden reported wages totaling $3,982,955. For the same years, the total tax paid by Oden was $327,164. According to the evidence at trial, Oden underpaid his income taxes for those years by approximately $1 million.
Davis and Oden used false partnership losses related to Davis’s skydiving business to fraudulently offset income on Oden’s 1998 through 2002 tax returns. Other fraudulent losses included a false auto finance sole proprietorship and false losses related to Oden Family Limited Partnership, which Davis set up and through which Oden purported to manage property and assets. As a result of these fraudulent losses on his tax returns, Oden’s tax liability was significantly understated for the years charged.

“Those who fly in the face of the tax laws by preparing or filing false and frivolous tax returns or failing to pay taxes risk criminal prosecution resulting in conviction, substantial penalties and time in prison, as well as being required to pay their taxes, interest and penalties,” said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. “The Tax Division remains committed to devoting resources to prosecuting tax defier conduct through its National Tax Defier Initiative (TAXDEF Initiative).”
“Filing false and fraudulent federal tax returns to avoid paying taxes is a crime that defrauds our government. This practice is unfair to those who willingly pay their fair share of taxes,” said Eileen Mayer, Chief, IRS Criminal Investigation (IRS-CI). “The conviction of these individuals underscores the determination of investigators and prosecutors to uncover and bring tax wrong-doers to justice.”
The court dismissed three other charges against each defendant. Each defendant faces up to nine years in jail and $750,000 in fines. Sentencing has been set for Sept. 8, 2008.
Assistant Attorney General Hochman thanked IRS-CI which investigated this case, and Tax Division trial attorneys Jennifer Ihlo and Jenny Grus who prosecuted this case.

[Famspear]

from above:

Oden is a former high-level executive with Sterling McCall Automotive Group in Houston, and Davis is a former owner of Skydive Houston in Waller, Texas.

A friend of mine used to jump out of airplanes at Skydive Houston. The story does not say when Davis ceased to be an owner, so I don't know if the two situations coincided.

[grixit]

I wonder what he would have thought if someone had come along with a claim that the parachute safety manual didn't actually apply to him.

[Dezcad]

Why did he choose a bench trial? At least if he went with a jury, he had a 0.000001% chance of getting a jury like Kuglin or Cryer did.

Just curious, if anyone can surmise on why he would not elect a jury trial.

[Famspear]

I wonder what he would have thought if someone had come along with a claim that the parachute safety manual didn't actually apply to him.

Sort of like the SteveSy approach to tax law, just applied to skydiving, and which would perhaps go something like this:

I don't care what 99% of the experts have always said about the law of gravity or what they have said about how to pack a parachute. There is a separate and distinct real law of gravity and a separate, real law of parachutes that are different from what the experts have ruled the laws to be, because 99% of the experts are corrupt or incompetent. And I decide those real laws for myself, yes I do, it's my right.

The difference of course, is that Steve would be correct to assert that the laws of physics do indeed exist independently of whatever the experts believe those laws to be at any given time. The experts' understandings do indeed evolve. So, a given real law of physics actually can be something that exists separately from (and differently from) what the experts say, at a particular moment, that law of physics is.

By contrast, under the U.S. legal system, the law is, by definition, what the courts rule the law to be, no matter how illogical or unfair the results seem to be to Steve. Steve refuses to accept this fundamental rule about our legal system -- and instead clings tenaciously and bitterly to his delusions (1) that there is somehow a "real" law that is separate from what the courts rule, (2) that he has discovered that "real" law, and (3) that the reason the courts disagree with Steve about the law is that the courts are somehow "wrong."

[Judge Roy Bean]

Why did he choose a bench trial? At least if he went with a jury, he had a 0.000001% chance of getting a jury like Kuglin or Cryer did.

Just curious, if anyone can surmise on why he would not elect a jury trial.

He was a car dealer.

Need I say more?