FOR IMMEDIATE RELEASE|
WEDNESDAY, AUGUST 31, 2005
TDD (202) 514-1888
HUSBAND AND WIFE SENTENCED FOR TAX EVASION SCHEMES
WASHINGTON, D.C. - The Justice Department announced today that Royal Lamarr Hardy, a resident of Honolulu, Hawaii, was sentenced to a 156-month prison term for selling tax evasion schemes and failing to file his own income tax returns. Upon his release from prison, Hardy must complete a term of supervised release totaling 36 months. Hardy was ordered to begin serving his sentence on October 12, 2005. He was also ordered to pay a fine in the amount of $59,267.88, costs of prosecution in the amount of $59,267.88, and $197,555 in restitution to Internal Revenue Service.
Hardys wife and co-defendant, Ursula Supent, was also sentenced today to a term of 60 months imprisonment, 36 months of supervised release, and restitution of $197,555. Two other co-defendants, Michael L. Kailing, a self-styled tax accountant from Honolulu, Hawaii, and Fred M. Ortiz, a tax-return preparer formerly of Kona, Hawaii, were each sentenced yesterday to 36 months confinement and three years of supervised release. A fifth defendant, Terry Leroy Cassidy, formerly of Yakima, Washington, awaits his sentencing tomorrow.
People who enrich themselves by encouraging and helping others to hide income and assets from the IRS should expect to be prosecuted and convicted, and to serve time in federal prison, said Assistant Attorney General Eileen J. OConnor.
On May 13, 2005, after several days of trial, a federal jury in Honolulu, Hawaii, convicted Hardy and his co-defendants of conspiring to defraud the United States by selling various tax-evasion schemes over several years for the purpose of impeding the functions of the Internal Revenue Service. Hardy and Supent were each convicted of a second conspiracy to defraud the United States with respect to their own income taxes. Hardy was also convicted of three counts of willfully failing to file his own income tax returns for 1995, 1996, and 2001.
Hardy and his co-defendants were convicted of promoting what they called the Reliance Defense from 1985 to 2002, which consisted of books and binders filled with materials purporting to show a studied conclusion that the federal income tax laws were voluntary. By voluntary, the defendants meant that the laws imposed no legal obligation to file a return or pay a tax. The defendants marketed these materials throughout the United States under the business names The Research Foundation and—earlier—The Cornerstones of Freedom. In addition, Hardys organization promoted the use of trusts and bankruptcy proceedings to evade the collection of income taxes. Senior U.S. District Court Judge Edward Rafeedie found that these schemes cost the United States treasury more than $8,600,000.
Assistant Attorney General OConnor and United States Attorney Edward H. Kubo thanked Tax Division Trial Attorney Brian D. Bailey and Assistant U.S. Attorney Clare E. Connors–who prosecuted the case–and the agents of the Internal Revenue Service, Criminal Investigation, who conducted the criminal investigation.