By Katharhynn Heidelberg
Daily Press Senior Writer
December 29, 2007
HOUSTON — The IRS should be as public with acquittals as it is in announcing indictments and convictions, tax attorney Michael Minns said.
Minns, a Houston-based attorney and author known for taking on the IRS, directed the defense team of Montrose residents James and Pamela Moran, who were acquitted last week of all 64 tax fraud counts filed against them.
“They should apologize to the Morans. They should post on their Web site the Morans are innocent,” Minns said in a phone interview Thursday.
“I have to defend clients against one of the largest public relations firms in the world. They’re a PR department and since it’s paid for by taxpayer dollars, they should release that (information). “It’s un-American for them not to tell the truth both times.”
The IRS has not released a statement about the Moran acquittal. Its Grand Junction spokesman said he wasn’t authorized to speak about the verdict and because of the holiday, none of the people who could comment were available Friday.
The Morans were indicted in 2002, after a two-year investigation and first tried in 2004. The government contended they helped Anderson Ark Associates sell illegal tax shelters in a scheme involving millions of dollars.
Initially convicted, the Morans won an appeal to the Ninth Circuit court, which reversed the convictions and ordered a new trial, finding the original court erred in disallowing Pamela’s testimony as hearsay. The Morans are the only AAA defendants to date to be acquitted.
Minns said the government “demonized” the Morans, but has been silent since their acquittal.
“When someone is exonerated…that should be posted on their (IRS) Web site,” he said. “They posted everything when the Morans were indicted. … And why release it (news of the indictment) in Montrose, Colorado? They release it in Montrose, Colorado to destroy the Morans, to make their friends and neighbors suspect them. To demonize them in their own community.”
He also blasted the IRS for not doing enough to warn investors ultimately defrauded by AAA’s schemes. Minns said that IRS investigators knew what AAA was doing, yet continued to send undercover agents to AAA seminars instead of alerting the public.
“The Morans have told everybody they’ve dealt with their eyes were opened. They can’t tell everybody. The IRS could tell everybody. The media could tell everybody. Nobody should be using their (AAA) deductions,” Minns said.
The IRS details numerous tax schemes on its Web site, www.irs.gov. Its list includes corporate fraud, money laundering, abusive (tax) return preparation and abusive tax schemes similar to the one perpetrated by AAA.
The site reminds citizens that “if something sounds too good to be true, it probably is.”
It also details a partnership between the IRS and Department of Justice concerning abusive tax schemes. “Parallel civil and criminal investigations are an effective and aggressive approach that halts these schemes quickly and permanently,” the Web site reads.
The partnership included the issuance of numerous consumer alerts and educational tools.
The site also details how criminal investigations are conducted (see related) and shows an incarceration rate of 80 percent for fiscal year 2007’s abusive tax scheme cases.
Minns alleged the IRS punishes individuals for what international corporations do as a matter of course. The system is stacked against defendants like the Morans, he said.
Minns and his team, which included his daughter, Rain, Peter Mair and John Zulauf, were court-appointed at a significantly reduced rate. Expert testimony was also secured at the lower, court-appointed rate, enabling the legal team to donate much of its time.
“This is a very, very special case, I was pleased to get the appointment and defend these wonderful people,” Minns said. “We always knew they were innocent, but only God knew what was going to happen.”
The case stood out as the “first clean acquittal” in the IRS’ massive undertaking against AAA.
“They had about 300 agents assigned. They did raids in three countries,” he said. “So far, every person who did business with them has been convicted and most of them have gone to prison. It (the Moran case) is the first clean acquittal.”
Minns contended the IRS wanted to put the Morans in jail for fraud perpetrated by AAA’s key players — fraud they had no way of knowing about because the proof was in records they could not access.
“Ignorance of the law is not usually a defense, but in tax cases, it always is,” Minns said.
How the IRS initiates criminal investigations
The IRS investigates violations of tax code, the Bank Secrecy Act and money laundering statutes. It refers findings to the Department of Justice for prosecution.
Investigations can be initiated when audits or revenue officers detect possible fraud; the public and ongoing investigations conducted by other law enforcement agencies
Special agents analyze information to determine whether a crime could have occurred. Once a preliminary investigation is complete, the agent’s supervisor reviews it and determines whether to go any further. If that determination is made, the supervisor obtains approval from the special agent in charge.
Once an investigation is opened, the special agent obtains information and evidence through a variety of techniques. The special agent works with IRS chief counsel criminal tax attorneys.
A special agent and supervisor use the investigation to substantiate whether criminal activity has taken place. If the investigator determines prosecution is warranted, a recommendation is forwarded to either the DOJ or U.S. Attorney
Source: Internal Revenue Service, www.irs.gov