Joe was a man charged with four counts of failure to file a tax return in Dallas. He’s in my first book, The Underground Lawyer. Not guilty on all counts by a jury.
The Jimmies were:
- A rap studio owner in Houston. No tax charges filed after a long investigation. Other unrelated false charges filed, all beaten in court.
- A Vietnam War veteran and truck driver in Boston. Not guilty. Two charges of assault by family members. He’s in my second book, How to Survive the IRS. All charges beaten in court.
- A preacher and his wife in Washington. Not guilty on all charges. No mainstream coverage. Could be in my next book. The US~Observer did a superb story on this case.
- A successful restaurateur and multinational construction manager, born on a Native American reservation. Trial in Phoenix. Not guilty on all counts. No story written. Could be in my next book.
- An environmental demolition expert without a single on-the-job injury. No story written. Could be in my next book.
The Stories And The Effects
The Joe: He didn’t file. He didn’t pay taxes. He was found not guilty. Afterward, he was ordered to pay but didn’t have the money. So he didn’t pay. The government spent a million bucks investigating him and charging him and trying him. They refused all compromises, all efforts to pay taxes. Lots of expenses. No tax collections. No prison. Just waste.
Three of the Jimmies were found not guilty on all counts in trials.
Jimmy, the preacher: The most expensive and detailed investigation in U.S. history. A raid conducted in three countries and multiple States. No compromises. Two trials. One appeal. It is impossible to add up the total expenses. Estimate? $50 million or more. The case ran from 2001 until 2007. Lots of publicity. Lots of stories. Lots of press releases, except when Jimmy and his wife were found not guilty on all counts and got their home and car back. Total tax collections? 0. Total stories released by Internal Revenue Service telling the truth, that the preacher and his wife were not guilty? 0.
Jimmy, the restaurateur: This was a cheap one. Liens. Fights. Attempts to compromise. Loans from kids to pay off taxes rejected. Jimmy and his wife were found not guilty on all counts. Years of fighting and paying lawyers (a million bucks was spent before I was hired). Offered to the government? Nearly a million dollars. Refused. Total time in prison 0. Total paid in taxes after the government rejected all offers. 0. Total cost to the government? Estimated at about $1 million to $2 million. A bargain by their standards… if they had won.
Jimmy, the truck driver: Really cheap. Total government expense? Less than $200,000. Total time in prison? 0. Total in taxes collected? 0.
Jimmy, the rap studio owner: After two years of examination, the government gave up. No charges filed at all. Ever. Total cost to the government? About $300,000. Total collected in taxes? Millions of dollars, plus. In this case alone the government decided it couldn’t make its case against this innocent man and it threw in the towel. And then it charged him with a non-tax crime, for which he was also innocent… and he beat that in court. But this is a tax article, so ignore that for the rest of the story. No charges filed. Lots of money collected (although not one extra penny over his income than he was paying anyway, so the investigation and prosecution gained the government nothing — that is part of this story.)
Jailed Jimmy: aka Messenger Jimmy, aka Demolition Jimmy. This Jimmy is the tragic hero of this story. The IRS said it would drop all charges against his wife if he would plead to one count and go to jail. He agreed to that. He went to jail for 18 months. After 18 months (without being able to pay a penny in taxes since he was in prison), Jimmy went to a halfway house. He was told he could be released if he got a job. Jimmy can make more than $1 million a year doing demolition work, tearing down places that are toxic and then fixing the parts and selling them. But as a convicted felon and without an education, he can’t very easily get a minimum wage job flipping hamburgers. But getting a job is exactly what he was ordered to do as a requirement for leaving the halfway house. So I hired Jimmy at minimum wage. He worked for me for 90 days as Messenger Jimmy.
Messenger Jimmy had to be interviewed and reviewed. And to hire Messenger Jimmy, my office had to agree to be reviewed. When I wanted to send Messenger Jimmy to our farm, where he could actually do something of value for me, the release program said “No.” He’d have to reapply. Since that’s in another county, he couldn’t do it anyway. When I hired Messenger Jimmy, I was thanked by the release officer because, she told me, they had a lot of trouble placing their felons. I told her: “Well, of course. You make it tough to hire them. Employers don’t like rules. I won’t hire anyone else from you unless I am doing it as a favor to them… not you. You make it more expensive for me and for them.”
Messenger Jimmy had started prison in a camp where it is horrible, but you don’t get raped in the shower and you aren’t in a prison room with bars. Another “felon” stuck a cellphone under Messenger Jimmy’s cot and he got into trouble for it and was sent to a hard core prison. There he was put in “the hole,” a 5-by-7 foot windowless cell with a toilet in the center of the back wall and a sink over it for water. In the hole Jimmy stayed 23 hours a day for four months. But he got to get handcuffed three times a week and moved into a shower for five minutes. The rest of the time, if you added fire and brimstone, according to Jimmy, he would have been in hell. An estimate of the cost of keeping Jimmy in prison is about $50,000 a year. Jimmy could have gone to an Ivy League college for less. Cost of Jimmy’s pre-trial and sentencing? Estimated? $300,000. Cost of Jimmy in prison for 18 months? Estimated $100,000. Why not $75,000? Well, that does not take into consideration the administrative legal proceedings, the travel from one prison to another on Conair. Real cost? That’s higher. Jimmy paid about $200,000 a year in taxes both before prison and after he was allowed to leave my office, by proving he could “make it in civilian life” and passing the judgment of his release officer that he had been rehabilitated. Figure that at four years since he couldn’t work the two years before prison, or $400,000. And since his business doing demolition work was closed down, 40 people making an average of $40,000 a year, paying an average of $10,000 a year in taxes, Social Security and FICA taxes matched by Jimmy’s company, or about $400,000 a year times four years or $1.6 million.
For many people like Jimmy, who aren’t capitalists, but 9-to-5 workers, as a felon they can’t ever get back on top. Since Jimmy is a capitalist and needs no one’s approval (once the government lets go of him) to run his own business, he could and did get back to business.
Joe, non-filer: Lots of expense. No money. Trial torture.
Jimmy, rap guy: Little expense. Lots of money. No charges filed.
Jimmy, preacher: Lots of expense. No money. Trial Torture.
Jimmy, truck driver: Lots of expense. No money. Trial Torture.
Jimmy, contractor: Lots of expense. No money. Trial Torture.
Jimmy, demolition expert: The only one to work with the IRS. The only one to plead guilty. The only one to go to jail. Lots of expenses. No money. Torture in prison.
No trial, no charges: That’s the best deal for us, the taxpayers, the government budget and the citizen. That beats everything.
Not guilty verdict in trial: If you can’t avoid trial, it’s the second best deal — not a good deal, but a lot better than the alternative. It’s a bad deal for the government for sure, but it’s a bad deal for all taxpayers who foot the government’s bill.
Pleading guilty or losing in trial and going to jail: That’s the worst deal. It’s horrible for the taxpayers. We all lose a lot of money. It’s torture for the citizen whose civil rights are gone forever, whose family is tortured and who will face hell in prison. It’s a good deal for the government employee. He gets promoted and praised. A new, improved resume. It’s a bad deal for America. We turn useful citizens into failed citizens with a second-class status for life; but then again, maybe that is what they want.
(US~Observer exclusive — used by permission.)