WASHINGTON - Michael John Smith, a commemorative firearms dealer, was convicted today following a jury trial in Cheyenne, Wyo., on federal tax and fraud charges, the Justice Department and Internal Revenue Service (IRS) announced. Smith, formerly of Cheyenne, was indicted on May 16, 2007, on one count of obstructing the IRS, one count of tax evasion, and three counts of submitting fictitious obligations. He was also charged with two counts of submitting false statements relating to a bankruptcy petition.
According to the evidence presented to the jury, Smith purported to pay over $500,000 in taxes, penalties and interest owed to the IRS for tax years 1995, 1996 and 1997 with checks drawn on a closed bank account and with fictitious financial instruments called "bills of exchange." Smith also attempted to pay his Wyoming state sales tax liability with a similar fictitious obligation.
After the United States District Court for Wyoming entered a decree of foreclosure against the defendant's residence in 2004 to satisfy a federal tax lien, Smith harassed federal officials and employees, including IRS employees, federal judges for the District of Wyoming, and the U.S. Attorney for the District of Wyoming, by threatening to file liens against them and have them arrested if they did not pay him hundreds of millions of dollars.
Smith also filed documents with Wyoming's Secretary of State falsely claiming that the federal officials owed him at least $767 million and up to $2 billion and that their property was encumbered by security interests in favor of him. Smith also filed a false bankruptcy petition in February 2006 that failed to disclose his interest in a home in Mona, Utah, which he purchased in May 2005 in the name of a nominee.
"Convictions, like the one returned against Smith today, send a loud and clear message that illegal tax defiers will be investigated, prosecuted, and subjected to the full punishment of the law for their actions," said Nathan J. Hochman, Assistant Attorney General of the Justice Department Tax Division
"The law is clear on the issue of taxable income and who is required to file and pay taxes: there is no gray area on the subject," said Eileen Mayer, Chief, IRS Criminal Investigation. "We should not forget that the ultimate victims in tax fraud cases are the people of the United States - those honest taxpayers who diligently file tax returns each year. This conviction sends a message that the IRS is working to make sure that all taxpayers file and pay their fair share of taxes."
At sentencing, Smith faces a maximum sentence of more than 93 years in jail and a fine of more than $1.75 million. U.S. District Court Judge Clarence Brimmer has not set a sentencing date.
The case was prosecuted by Justice Department Tax Division trial attorneys Katie Bagley and Jay Nanavati and was investigated by the IRS Criminal Investigation Division.