SORCE Trial

[AFTP]

Are they in jail now?

Lyon no, Casternovia yes.

I must wonder where Lyon is staying because in his plea agreement he gave up all his property.
He had a nice house on a few acres in Josephine Valley in southern OR.
All gone now but he knew the risks on being "sovereign" and was "willing to go to jail."

Now if only they'd shut down Brent Johnson.

[wserra]

The docket is a little puzzling as to what happened Thursday (Sept. 16), when Casternovia and Lyon were supposed o be sentenced. The only docket entry for that day is a notice of a "restitution hearing" set for October 27. A guess: the amount of the fraud is an important element in the Guideline calculation, and the parties dispute that amount. Accordingly, before arriving at the Guideline, the Court wants to resolve that issue. And Casternovia is in custody, just not BOP custody.

Meanwhile, AFTP, perhaps you would be interested in the govt sentencing memos as to Casternovia and Lyon. They contain a pretty specific outline of the entire sordid scheme. The govt doesn't make a specific recommendation as to Lyon, but it recommends 235 months as to Casternovia.

[AFTP]

Thanks!

At 61 Gino is a lifer with 19 years.

[jg]

...Meanwhile, AFTP, perhaps you would be interested in the govt sentencing memos as to Casternovia and Lyon. They contain a pretty specific outline of the entire sordid scheme. The govt doesn't make a specific recommendation as to Lyon, but it recommends 235 months as to Casternovia.

For those playing at home and not apt to read the memo, page 4 says :

Sham entities were not the only product Casternovia hawked. SORCE helped its clients attempt to become “sovereign” – a term that, in the tax protestor world, means roughly that one is not subject to the laws of the United States.

This “sovereignty” goal was part of SORCE’s mission statement:
“1. re-inhabit the American republic with sovereign citizens who understand the spiritual and legal framework set out in the founding documents [of the United States],
2. facilitate a community of like-minded individuals ... , and
3. provide an educational and coaching service along with the legal and business tools necessary to acquire asset protection and economic, legal, and political sovereignty.” Gvt. Ex. 8.02.

To assist clients in becoming sovereign, SORCE sold purported “private” birth certificates, identification documents, driver’s licenses, and passports, products all intended to replace their legal counterparts and sever a client’s ties to the government.
Of course, “sovereignty” had a tax benefit as well – it provided the clients with a justification for not paying taxes.
When considered in light of SORCE’s “sovereignty” claims, Casternovia’s argument
(through counsel) that he encouraged clients to “pay any taxes due” misses the mark. This type of doublespeak is a hallmark of the tax protestor movement.

In accordance with the idea of “sovereignty,” Casternovia taught his clients that the government had no authority to tax the labor income of private sector workers. In a happy coincidence, these supposed “jurisdictional” limitations of the federal government posited by Casternovia allowed his clients to arrange their affairs in a way that rendered them completely exempt from tax. To counsel clients to “pay the taxes you owe” while claiming they owe no taxes is a sleight of hand that should fool no one.

Casternovia encouraged tax evasion.

Casternovia knew better than to expect that his products would pass muster with the IRS
or the courts.

To “pay the taxes you owe” while claiming that the government has no authority to tax the labor income of private sector workers is tax evasion when you act to mislead the government or to avoid payment .

[AFTP]

http://www.dailytidings.com/apps/pbcs.d ... 02/9200318

Posted: 1:00 PM September 20, 2010

A Florida federal court has sentenced a former Ashland restaurant owner to seven years in prison for his part in a tax and debt elimination scheme.

Eugene "Gino" Casternovia was one of three men sentenced in federal court in Pensacola today for helping people set up sham businesses to avoid taxes.

He had faced a possible 25-year prison sentence and $750,000 in fines for his role in a complicated scheme involving tax fraud, wire fraud and money laundering, attorneys for the U. S. Department of Justice and Internal Revenue Services said.

"There are consequences for disobeying the laws of our nation. These defendants are now being held accountable for their criminal behavior," said IRS attorney Victor S. O. Song in a press release.

Williams resident Mark Lyons, who previously pleaded guilty, was sentenced to 18 months in prison. As part of a plea agreement, Lyon cooperated with the government and testified at trial against Casternovia and six others.

U.S. District Judge Margaret C. Rodgers set aside a jury verdict against another Ashland man, Robert Pendell, who was a former employee of Casternovia's. He was acquitted on all counts.

Casternovia, 62, was arrested in August 2008. He and his wife, Kathryn, had lived in Ashland for 25 years and owned the now-defunct Northlight vegetarian restaurant and the Rainforest Cafe.

On March 31, a federal jury returned guilty verdicts against eight people following a month-long trial in Pensacola involving the promotion of fraudulent schemes through a company known as Pinnacle Quest International, PQI or Quest International.

The government determined that Casternovia and others presented and sold tax-fraud schemes at trade shows and conferences around the world, including a presentation for 400 people aboard a cruise ship in the Mediterranean in May 2007.

— Sanne Specht

Only 7 years? And why did Pendell get off? The Govt. is getting soft.

[wserra]

The govt isn't getting soft - the Court sentenced Casternovia to the seven years and granted JoA to Pendell. Still, Casternovia's sentence does seem light, and I too am curious as to why Pendell walked. So I checked the docket, hoping to find a statement of reasons for the sentence and an opinion on the JoA.

Instead, I find that the sentences themselves are not yet docketed, but a motion from yesterday for permission for Lyon to move before surrendering. Strange.

[AFTP]

So Lyon gets to move.
I did stay for a weekend at his house in Oregon once.
3 bedrooms on a 5 acre hilltop overlooking the Josephine Valley.
Very beautiful and now all gone.

18 months isn't that bad. being in his mid 50s he should be able to recover but the payback will be tough.

Geno will be 69. Not so easy since he may forfeit his SS money.

BTW, what is JoA?

[wserra]

So Lyon gets to move.

Maybe. The judge hasn't ruled yet.

18 months isn't that bad.

Cooperation is the key to the city in federal court.

BTW, what is JoA?

Judgment of acquittal. Rule 29, F.R.Cr.P.

[Judge Roy Bean]

JoA = Judgment of Acquittal.

I, too, am surprised Casternovia's sentence is only about half what it could have been.

[AFTP]

He's getting jail time so I don't think he got an Acquittal.

I wonder if Lyon will get harassed in jail for being a rat.

[Dezcad]

He's getting jail time so I don't think he got an Acquittal.

Pendell received the Acquittal and is not getting any jail time.

[wserra]

He's getting jail time so I don't think he got an Acquittal.

As Dezcad said, I was speaking of Pendell.

I wonder if Lyon will get harassed in jail for being a rat.

Half of the inmates in BOP facilities were rats, and the other half (who are doing much longer sentences) wish they'd been.

[wserra]

The govt calculates restitution at $4.5M, and takes the position (right, I think) that all of the principals are jointly and severally liable. The hearing on restitution was scheduled for yesterday, but there is no entry in the docket.

[AFTP]

Good luck getting the money.
Lyon did give up his property but since Gino's wife wasn't charged she may keep the house.

I remember with IGP that the Govt. didn't recover any off shore money for the people who got taken in the investment scams.
They only went after non paid tax interest on the investment from IGS' clients.

My tax dollars at work.

[AFTP]

http://www.mailtribune.com/apps/pbcs.dl ... S/11290320

IMO anyone who bought his stuff thinking it was legal should get their money back.

Ex-Ashland restaurateur won't pay any restitution
Man found guilty in phony business scam in Florida in August

November 29, 2010
Chris Conrad
By Chris Conrad
Mail Tribune

A former Ashland restaurant owner found guilty of creating a fake business to avoid taxes will not pay restitution for his crimes, according to federal court documents.

A Florida federal court could not find evidence that anyone actually lost money from Eugene "Gino" Casternovia's scheme. In fact, Casternovia was convicted on conspiracy charges, which suggests he had not followed through with the alleged scam.

The only money he is obliged to pay is a $200 court fee, according to federal court documents filed Nov. 12.

Casternovia, 62, was one of three men sentenced in federal court in Pensacola, Fla., for helping people set up sham businesses to avoid taxes.

Casternovia's wife, Kathyrn Casternovia, said the judge's refusal to award restitution in this case points toward his innocence.

"There was no money stolen from anyone," she said. "All of (Gino's) clients were made whole."

Kathryn Casternovia said her husband plans to appeal his seven-year sentence. She hopes he will be returned to Oregon should he serve a prison term. "It would be good if he was near his family and friends," she said.

He had faced a possible 25-year sentence and $750,000 in fines for his role in a complicated scheme involving tax fraud, wire fraud and money laundering, attorneys for the U.S. Department of Justice and Internal Revenue Service said.

"That amount of money was completely arbitrary," Kathryn Casternovia said.

On March 31, following a month-long trial in Pensacola, a federal jury returned guilty verdicts against eight people who were involved in promotion of fraudulent schemes through a company known as Pinnacle Quest International, PQI or Quest International.

The government determined that Casternovia and the others presented and sold tax-fraud schemes at trade shows and conferences around the world, including a presentation for 400 people aboard a cruise ship in the Mediterranean in May 2007.

In Casternovia's pre-sentencing hearing Sept. 16, he said he "sold very few PQI memberships, as established through the testimony of Mark Lyon, and was never part of the PQI leadership."

Casternovia was arrested in August 2008. He and his wife have lived in Ashland for more than 25 years and once owned the now-defunct Northlight vegetarian restaurant and the Rainforest Cafe.

Reach reporter Chris Conrad at 541-776-4471 or e-mail cconrad@mailtribune.com.

Reader Comments:

Larry Graves
Gino was charged with and convicted of showing other people how to work within the letter of the byzantine tax laws to minimize their tax liabilities. As Buck points out in his comment, everything he did was perfectly legal, but "stuff the government doesn't want you to know about" (read: all members of Congress do this). The jury was unable to address the bigger-picture issues of this case, and convicted him on the narrow grounds presented.

Gino and his ideas are a threat to our current rogue government, and so he is attacked. The article does not point out that the federal judge holding the Restitution Hearing literally blasted the prosecutor in the most scathing of terms, because the government was not able to produce ONE SINGLE WITNESS who would claim that they had been injured by Gino's actions. Of course they couldn't -- everyone benefited, and NO ONE was injured. Gino was persecuted for the sake of statist ideology.

Our government, which we created to help us, has instead beggared each of us, along with all our progeny. Our leaders line their own pockets and those of their banker buddies, while we suffer the consequences. God help anyone who threatens to reduce the taxes taken from each of us to feed this beast. As a people we are too complacent or frightened to do anything about it -- just the way the powers that be, Republican and Democrat alike, want it. Gino remains innocent of any wrongdoing, in my opinion. He is my hero.
Yesterday, 1:19:51 PM

Buck Eichler
I've received very impressive brochures and portfolios on offshore investment plans, home-based businesses that make next to nothing but are write-offs, etc. They presented themselves as perfectly legal, but strategies the government doesn't want you to know about. I smelled a rat, but many people don't, or maybe just don't sniff very hard.
Yesterday, 10:58:31 AM

Dominic
So Buck, what is your point, except for the chance to see your name in the paper?
Yesterday, 8:54:40 PM

[jcolvin2]

He's getting jail time so I don't think he got an Acquittal.

Pendell received the Acquittal and is not getting any jail time.

Pendell was barred from promoting false tax schemes:

http://www.justice.gov/opa/pr/2011/Nove ... -1441.html


Department of Justice
Office of Public Affairs
FOR IMMEDIATE RELEASEWednesday, November 2, 2011
Federal Court Bars Oregon Man from Promoting Tax-Fraud Schemes
Ashland Man Promoted Tax Scams Involving Sham Entities

WASHINGTON – A federal court has permanently barred Robert Pendell from promoting any scheme that assists or advises customers to attempt to violate the tax laws, the Justice Department announced today. The civil injunction order was entered by Judge Owen M. Panner of the U.S. District Court for the District of Oregon. According to the government complaint, Pendell resides in Ashland, Ore.

The United States sued Pendell, Eugene Casternovia, Robert Hagopian, Mark Lyon and their company, the Southern Oregon Resource Center Educational Services (SORCE) in April 2008 to enjoin them from promoting a scheme to conceal their customers’ assets from the Internal Revenue Service. As the government alleged in its amended complaint, and as the court found, Pendell promoted tax scams that involved the sale and use of sham entities through SORCE and a related multilevel marketing organization called Pinnacle Quest International. The court also found that Pendell organized and marketed these programs as a fraudulent means for customers to evade the reporting and payment of federal taxes.

According to the court, injunctions were previously entered against Casternovia and Lyon. In recommending that Pendell be enjoined, U.S. Magistrate Judge Mark D. Clarke cited a 2005 videotaped interview in which Pendell equated the payment of taxes to slavery and stated that SORCE products enabled customers to “reclaim their sovereign rights.” The court found that SORCE had at least 350 customers and, according to its internal records, made more than $1.6 million in 2005 through the sale of its programs.

In the past decade, the Justice Department’s Tax Division has obtained injunctions against hundreds of tax-fraud promoters and unscrupulous tax preparers. Information about these cases is available on the Justice Department website.

11-1441 Tax Division

[AFTP]

And it only took them 3 years to do it.

[wserra]

All convicted defendants have sought and received extensions on the time limits to perfect appeals into mid-October.

[AFTP]

And the odds of them winning?

I hear Mark Lyon is out of jail.
Wonder what life's like for him post TP.