Federal Grand Jury Indicts Protester for Tax Evasion
By DAVID CAY JOHNSTON
Published: March 25, 2004
A federal grand jury in Las Vegas yesterday indicted Irwin Schiff, who has been accused of helping thousands of Americans evade income taxes in the last nine years, on tax evasion, conspiracy and other charges that could send him to prison for 43 years. His former girlfriend and an employee were also charged.
Mr. Schiff, 76, whose psychiatrist has determined that he holds a deluded belief that he alone can properly interpret the tax laws, said he was certain no jury would convict him. He said that the indictment - he learned about from a reporter - was "itself a fraud."
The indictment handed up yesterday charges Mr. Schiff with tax evasion, conspiracy, preparing at least 4,950 returns that fraudulently listed zero income, failing to report $3.7 million in sales at his bookstore from 1997 through 2002 and using offshore accounts and an illegal "Christian Patriot Association" bank in Oregon to hide income and assets. The Oregon bank's owners were convicted of tax crimes in June 2002.
Mr. Schiff, who has twice before gone to prison for tax crimes, also faces $3.25 million in fines if convicted.
His former girlfriend, Cindy Neun, was charged with conspiracy, failure to file her tax returns, Social Security disability fraud and theft of government property.
Lawrence Cohen, 63, an employee of Mr. Schiff's bookstore, Freedom Books, was charged with conspiracy, preparing fraudulent tax returns and tax evasion. A trial will be "a good opportunity to prove whether or not there is a law that requires anybody to pay an income tax," Mr. Cohen said.
Mr. Schiff said, "I have done everything in the open, so what crime can I have committed if I did everything on the open?"
"I have no income in the constitutional sense," he said. "I have no income. I have filed my tax returns and reported zero income because I have no income in the constitutional sense. The government has fraudulently gotten an indictment and the claim that I owe taxes is false. The indictment is a fraud and I will file a motion to dismiss."
"No jury can convict me," Mr. Schiff added, citing two legal theories. "I say I am America's leading expert on the income tax. Everyone knows I believe no law requires me to pay taxes, so there is no willful intent to commit a crime. And if I am wrong, then I am delusional, in which case I am not willful. So they can't legally convict me of tax evasion or any other crime that requires willful intent."
Mr. Schiff, recalling a 1995 dispute in which the Internal Revenue Service seized his car to satisfy a past income tax bill, said he was surprised that it took the government years to indict him. He attributes the indictment to his growing success in persuading Americans that they can legally stop paying income taxes, a view that he says has spread rapidly in the last few years and is now shared by millions of Americans.
Eileen J. O'Connor, the assistant attorney general in charge of the Justice Department's tax division, said that "there is no magic way out of paying taxes."
"If you fall for a scheme to cheat the I.R.S., you may lose your money to a con artist," she said. "You may wind up in federal prison. In the end, you will still owe taxes, and you may also owe interest and penalties."