This article appeared in the Las Vega Sun Newspaper
By CHRISTINA ALMEIDA
LAS VEGAS (AP) – A federal grand jury indicted anti-tax author Irwin Schiff and two associates Wednesday, charging them with conspiracy to defraud the United States by helping others file false tax returns.
Schiff, the author of “The Federal Mafia: How It Illegally Imposes and Unlawfully Collects Income Taxes,” argues there is no legal requirement to pay income taxes. Government lawyers have been pursuing civil actions that would bar Schiff from selling his book and from holding tax seminars.
“There is no magic way out of paying taxes,” said Eileen O’Connor, assistant U.S. attorney general for the tax division in Washington, D.C.
The 33-count indictment issued in Las Vegas charges Schiff, Cynthia Neun and Lawrence Cohen with aiding and assisting in the preparation and filing of fraudulent tax returns.
Schiff and Cohen also were charged with tax evasion. Neun will face additional charges of willfully failing to file federal income tax returns, Social Security disability fraud and theft of government property.
If convicted, Schiff faces a maximum sentence totaling 43 years in prison and $3.25 million in fines. Neun, Schiff’s girlfriend who helps him conduct seminars, could receive a 51-year sentence and $3.4 million in fines, and Cohen faces a maximum 27 years and $1.5 million in fines.
“The indictment today reminds us that fulfilling individual tax obligations is a legal requirement and those who willfully evade that responsibility will be prosecuted,” said Nancy Jardini, who oversees criminal investigations for the Internal Revenue Service.
Schiff, 76, said he will file a motion to dismiss.
“At my arraignment, I will plead guilty to all the charges if they can show me a law in the code that says persons earning income are liable for income taxes,” Schiff said.
Cohen, an employee at Schiff’s Freedom Books, said he welcomed a chance to challenge the federal government’s tax code.
“I think it’s a good opportunity to prove that they’re wrong,” Cohen said.
In the indictment, federal prosecutors allege Schiff, Neun and Cohen were responsible for nearly 5,000 tax returns that fraudulently reported no income, or “zero returns.” Those tax forms included zeros on every line related to income and expenses and often claimed a full refund of all federal taxes withheld or paid.
After filing the “zero returns,” many of Schiff’s clients faced IRS audits and collection of taxes.
The indictment also alleges Schiff, Neun and Cohen encouraged clients to pay for additional products they offered to help the clients with their IRS problems and also charged them for any assistance with court proceedings or IRS correspondence.
Federal prosecutors said Schiff’s business, Freedom Books, generated $3.7 million from 1997 to 2002. Schiff did not report any income on federal income tax returns filed from 1987 to 2002 and hid money in an offshore bank account, according to the indictment.
Schiff, Neun and Cohen were ordered to appear in federal court in Las Vegas on April 14. No arrest warrants were issued.
The Internal Revenue Service raided Freedom Books in February 2003, setting off a series of legal actions that have made Schiff a frequent visitor to federal court. On Tuesday, Schiff appeared before a federal judge in Las Vegas to ask for the return of some 14,000 documents seized in the 2003 raid.
A hearing scheduled Thursday concerns a Justice Department request for an order requiring Schiff to pay $2.5 million in taxes, interest and penalties.