Federal Prison for Holley Barnes - GIRL SCOUT TROOP LEADER - 10 Years! Comments by Chuck Gallagher Ethics Keynote Speaker

And just the other day I placed my order for Girl Scout cookies!

Toward the end of January, Holley M. Barnes was sentenced to 10 years in federal prison and ordered to pay $87,976.70 in restitution. Wow!

It seems that Ms. Barnes used her position as Girl Scout leader in Pea Ridge, Florida to obtain personal history information from the members of the Girl Scout Troop. Barnes created a fraudulent “Girl Scout Medical Release” form in order to obtain this information which, among other things, included the individual children’s Social Security Numbers (SSN), informing the parents of the children that the Girl Scouts required this information in order to take trips. Barnes used the SSN’s of the children to prepare and file electronic federal income tax returns with the IRS, submitting false information regarding income and employment using the screen names of “Hotmama983″ and “Freewoman74″. The false refunds were then transferred into five different bank accounts which Barnes controlled. Barnes filed false claims totaling more than $187,000 from which she obtained more than $87,000 from the IRS as a result of fraudulently using the identity of these children, including her own children.

Guilty she was of nineteen (19) counts of filing false and fictitious claims for refund to the IRS, fifteen (15) counts of unlawfully using the identification of another person to commit an unlawful activity (Identity Theft), and one (1) count of theft of government property.

So get this - the theft of government property took place like this: Barnes also admitted to taking merchandise from the Pensacola Navy Exchange and returning it for a refund without having purchased the items. Barnes was able to obtain store credit for the value of the items even though she had no receipt. She made 32 separate returns with no receipts since April 2007.

Go Figure! Over the years, as a business ethics and white collar crime speaker (www.chuckgallagher.com), I have studied the “normal” process of how a fraud is committed. Most of the time there are three components. Even generally honest people can get caught up in a fraudulent transaction when all three are present. They are (1) Need; (2) Opportunity and (3) Rationalization. Now notice I said that honest people, when faced with all three can make wrong choices. That is exactly my background and the price paid was extraordinary.

However, in her case, one might wonder if there was a more serious problem. This goes well beyond the “perfect storm” for fraud. Rather, it borders on a psychological problem as the actions are so bizarre that it leaves you guessing - WHY?

For her sake, I hope her experience in prison helps…but somehow, I’m just not sure.

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Wesley Snipes - Learns Tax Lesson Agrees To Make Amends!

Guilty of three misdemeanor charges of failing to file tax returns was all that Snipes got from the jury of 12. Felony tax fraud and conspiracy - NOT GUILTY.

With this phase of his legal battle behind him Bernhoft stated that “Mr. Snipes has always been committed to doing the right thing and after this trial is over, he’ll make whatever amends are required.” Likewise, the IRS made it clear that they intended to pursue taxes on the roughly $38 million of income he earned during the time Snipes refused to file tax returns.

According to a report from CNN:

Snipes could have faced up to five years in prison on both the conspiracy and fraud charges. He was found guilty of only half — three out of six — of the failure to file charges. He faces a maximum one-year sentence on each but can be expected to be sentenced to less.

“Our position has been all along that Mr. Snipes committed no fraud,” said Robert Bernhoft, Snipes’ attorney, after the verdict was read Friday afternoon. “He had no bad intent, and that’s what the jury accepted.”

Eddie Ray Kahn and Douglas Rosile didn’t fare so well as both were found guilty on fraud and conspiracy charges.

Lessoff, of the IRS, said Kahn’s group is believed to have as many as 4,000 members. “This was a very high-profile case with us and we’re satisfied with the result because it clearly shows you cannot get away with not paying taxes,” Lessoff said. “If you are part of this organization, if you’re one of them, you need to get in touch with us and make right with us.”

Prediction: Zero doubt that Kahn and Rosile will face time in federal prison. Snipes on the other hand - well that’s going to be interesting. I could see the judge sentencing him to some prison time although my gut says - he’ll walk. Candidly, I would not have predicted that at the end of last week, but one never knows what a jury will do.

The White Collar Crime Blog says, “The minor convictions for Snipes and major ones for his co-defendants sends the message that one cannot claim ignorance if they follow a promoter of a tax scheme. But more importantly, those who promote such conduct can be charged and convicted of crimes such as conspiracy.

The numerous acquittals in the Snipes case should be making the government wonder whether it was worth the time, cost, and effort to proceed criminally against him, and whether civil penalties may have been more appropriate.”

Was It Worth It? You bet, at least as far as the IRS is concerned. Privately, I am sure they wish they had gotten a conspiracy conviction for Snipes. Nothing like a high profile individual in jail - makes the voluntary compliance system easier to manage. What they did get was the promoter in prison. That sends a clear message. Regardless of your personal beliefs, know that the IRS will pursue folks who don’t file and don’t pay.

Snipes will file now and pay (including hefty penalties and interest). I suspect that he will be on time with his 2007 return. It would certainly be in his best interest - BEFORE SENTENCING - to put his tax house in order. Failure to do so would send a clear prison sentencing message to the judge.

Every choice has a consequence. As a business ethics speaker (www.chuckgallagher.com) I understand that there are a minority of citizens who feel there is justification in not paying or filing taxes. I’ve heard the arguments and I’ve seen the results. You either end up in jail or end up with a huge tax bill or both! I’ve (not proud to say) been an inmate in federal prison and seen folks who were there for one reason and only one reason - tax fraud. While Snipes got off easy by convincing the jury that “he didn’t understand” the reality is - he now understands and will file and pay. WINNER: IRS!

Comments are welcome!

Wesley Snipes - NOT GUILTY of Felony Charges! Guilty of 3 Misdemeanor Not Filing Charges

At 4:05 p.m. Friday, actor Wesley Snipes was convicted on three misdemeanor counts of failing to file his federal taxes but found not guilty of two felony and three other misdemeanor charges.

NOT GUILTY ON FELONY CHARGES!

As I’ve said in numerous blogs, Wesley drank the koolaid and the jury must have seen that as well. He wasn’t by his choices a - convicted felon. However, the convictions carry a maximum sentence of three years in prison.

DOUBT HE’LL BE SENTENCED TO PRISON!

Snipes was charged with six misdemeanor counts of willfully failing to file federal income tax returns. He was found guilty only on three of those counts.

Kahn, who continued to sit out the trial in the Marion County Jail, and Rosile both were convicted on the more serious felony charges.

Snipes was waited in the courtroom after the verdict was read by Senior U.S. District Judge William Terrell Hodges. One of his lawyers went to finalize up a new bail bond for him. Hodges reduced Snipes’ bail from $1 million to $250,000.

Considering that Kahn was convicted of more serious charges…it appears that Kahn may be out of business in helping unsuspecting avoid their tax liabilities.

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Release Us From Our Bond - Wesley Snipes Might Run!

While the jury is still out, American Bankers Insurance Company of Florida said it could no longer guarantee Snipes’ appearance in court if he is convicted. “[D]efendant Snipes’ waiver of defenses indicates more than a lack of resolve. It can easily be inferred that the defendant has no faith in the judicial system and is an unwilling participant,” Surety Agent Aaron Aaba wrote.

“It is apparent that he may not vigorously pursue an appeal, if he is not interested in presenting a defense at trial. Therefore, any appeal is likely for purpose of delay in order to allow the defendant to flee,” Aaba’s motion continued. “It is also likely that Snipes simply does not consider himself to be subject to the jurisdiction of the court, or any United States governmental body.”

Snipes, Eddie Ray Kahn and Douglas Rosile are each charged with one count of conspiracy to defraud and one count of aiding and abetting the making of a false and fraudulent claim as part of an alleged tax fraud scheme. Snipes also is charged with six counts of willfully failing to file federal income tax returns.

Now, I’m no lawyer, but I do have a unique perspective as I’ve been in federal prison for tax evasion and know quite a few people who were there for the same thing that Snipes has done - no pay or file tax returns because somehow they felt they shouldn’t have to. I still never cease to be amazed at the responses I receive claiming that taxation on earned income is somehow not statutory. Anyway, back to Wesley…

Apparently the company had asked Snipes’ legal team to increase collateral for the bond, and that the actor’s lawyers had refused.

Hum…why would he pay more money if he won’t pay his taxes. Maybe Wesley is above the law - he’s a universal citizen and no governments rules apply to him? Well…maybe? Anyway, Senior U.S. District Judge William Terrell Hodges rejected the motion because it was not signed by a Florida lawyer or by the surety agent with power of attorney who signed the original bond.

Now wouldn’t you think that if you put a motion before a judge you’d dot the “i’s” and cross the “t’s”?

I suspect a verdict today…but as many odd twists as this trial has taken - who knows?

Your comments?