DOJ Tax - Update on ARL cases

[jcolvin2]

http://www.usdoj.gov/tax/txdv08847.htm
TWO MEN FROM MICHIGAN AND TEXAS FACE FEDERAL JUDGES FOR TAX-RELATED CHARGES

Justice Department Strives to Prosecute Fraudulent Tax Defiers

TUESDAY, SEPTEMBER 23, 2008

WASHINGTON -- Brent Gross and Clifford Leroy Kidd faced federal judges in Michigan and Texas this past week for tax-related charges, the Justice Department and Internal Revenue Service (IRS) announced today. Gross' and Kidd's cases were prosecuted under the Tax Division's National Tax Defier Initiative.

On Sept. 18, 2008, Gross, of Brighton, Mich., was sentenced by U.S. Judge Avern Cohn in Detroit to 21 months in prison for tax fraud. Gross was convicted in July 2007 of three counts of tax evasion, three counts of filing false tax returns and one count of passing a fictitious financial instrument. The evidence presented at trial showed that Gross, an electrician, became a client of American Rights Litigators (ARL), which was later known as Guiding Light of God Ministries. ARL was a Florida organization that sold schemes to help its customers defy United States tax laws. While an ARL customer, Gross stopped filing all federal and state tax returns for the years 2001 through 2003.

The evidence at trial showed that Gross provided his employer with two false W-4 forms that stated he was exempt from all withholdings. In addition, the evidence showed that Gross attempted to obtain refunds for taxes he paid in 1997 through 1999 by filing false amended tax returns showing "zero income" during those years. In October 2003, Gross also attempted to pay thousands of dollars in outstanding IRS penalties and interest by sending to the IRS a fictitious financial instrument known as a bill of exchange that he purchased from ARL for $100.

On Sept. 19, 2008, Kidd, of Monahans, Texas, pleaded guilty before U.S. Judge Sam Sparks in Austin, Texas, to one count of corruptly endeavoring to impede the IRS. As part of his plea, Kidd admitted to, among other things, filing or attempting to file false federal income tax returns or other documents in his name that did not report approximately $6.5 million in gross receipts from his crop-dusting business for tax years 1996 through 2005. Kidd had previously been indicted by a federal grand jury in December 2007.

According to the indictment and evidence presented at the change of plea hearing, Kidd joined ARL in 1997. Kidd obstructed the IRS in the assessment and collection of his taxes and those of his wife in part by filing false federal income tax returns in his name, causing the filing of false federal estate and trust returns in the name of his wife, and by filing false 1099 forms with the IRS. The tax loss relative to Kidd's conduct was in excess of $75,000. As part of the plea agreement, Kidd agreed to cooperate fully with the IRS, to file accurate tax returns for all outstanding years and to become current in the payment of his tax obligations. Judge Sparks has scheduled Kidd's sentencing for Jan. 9, 2009, in Austin. Kidd faces a maximum of three years in prison and a $250,000 fine.

"The events this past week should be a sign to tax defiers across the country that frivolous arguments and bogus schemes do not work," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division. "Under the National Tax Defier Initiative, the Tax Division continues to vigorously enforce federal tax laws against tax defier conduct throughout the nation."

"The IRS reminds taxpayers that getting involved in an anti-tax scheme carries a heavy price," said Eileen Mayer, Chief, IRS Criminal Investigation. "The courts have continuously held that these anti-tax arguments have no merit."

Assistant Attorney General Hochman commended and thanked the IRS special agents who assisted in these two cases and the Justice Department trial attorneys who prosecuted these cases. Gross' case was prosecuted by Tax Division trial attorneys Jeffrey McLellan and Kenneth Vert. Kidd's case was prosecuted by Tax Division trial attorney Robert Kemins and Assistant U.S. Attorney Gerald C. Carruth of the U.S. Attorney's Office for the Western District of Texas.

More information about the Justice Department's Tax Division, including its tax enforcement efforts against ARL and its customers, may be found at http://www.usdoj.gov/tax.

[Judge Roy Bean]

At one time Kidd had several of these operating out of Monahans: