WASHINGTON – East Aurora, N.Y., chiropractor and tax defier John Weisberg was sentenced today by U.S. Magistrate Judge Hugh B. Scott in Buffalo to 21 months in prison, the Justice Department and Internal Revenue Service (IRS) announced. The court also ordered that Weisberg, as a condition of supervised release, cooperate with the IRS in filing tax returns and paying back taxes that he has not paid. A federal jury convicted Weisberg of three counts of failure to file tax returns following a trial in February 2008.
Evidence introduced during trial showed that Weisberg became a member-client of a Florida-based tax defier organization known as American Rights Litigators (ARL) in 1997. ARL, formed and operated by Eddie Ray Kahn, promoted multiple tax fraud schemes. Weisberg purchased an ARL service by which ARL-affiliated lawyers and accountants, on Weisberg’s behalf, responded to IRS notices seeking his returns. The letters to the IRS advanced false and frivolous tax defier claims and requests purporting to set forth reasons why the defendant was not required to file returns or pay taxes. Weisberg stopped filing tax returns in 1995 and did not pay any federal income taxes between 1995 and 2003. The tax loss associated with Weisberg’s failure to file is approximately $144,000.
Despite Weisberg’s claims during trial that he had relied in good faith upon the advice of ARL, the evidence at trial showed that Weisberg was warned of his legal duty to file returns not only by the IRS, but also by Buffalo-area accountants and attorneys. Evidence at trial also showed that Weisberg employed other tax schemes, including an offshore bank account in the Bahamas, to evade the IRS.
"Taxpayers who attempt to avoid their federal tax obligations, such as Weisberg, face serious consequences, including prison time, fines and having to pay back all their taxes with penalties and interest," said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division. "Under the National Tax Defier Initiative, the Tax Division has committed to vigorously investigate, prosecute and convict those who engage in illegal tax defier conduct anywhere in this nation."
"Getting involved in an anti-tax scheme carries a heavy price," said Eileen Mayer, Chief, IRS Criminal Investigation Division. "There is no secret formula that can eliminate a person’s tax obligations."
Assistant Attorney General Hochman thanked Tax Division trial attorneys John Kane and James Strawley who prosecuted this case, as well as the U.S. Attorney’s Office for the Western District of New York. He also thanked the special agents of the IRS whose assistance was essential to the successful investigation and prosecution of this case.
In February 2008, a federal jury in Florida convicted and sentenced ARL leader and promoter Eddie Ray Kahn to ten years imprisonment. In April 2008, actor Wesley Snipes, another ARL customer, was sentenced to three years imprisonment.
In August 2004, a federal district judge permanently enjoined Kahn, ARL and others from promoting certain fraudulent schemes such as those regarding the excludability of income or those encouraging noncompliance with the tax laws. The injunction further barred the defendants from preparing correspondence to the IRS for customers, from representing others before the IRS and from falsely advising customers that they are not required to file federal tax returns or pay federal taxes.
In November 2006, Milton H. Baxley II was sentenced to 18 months in prison and a $10,000 fine for committing contempt of court by violating a similar injunction related to his involvement with ARL. More information about the Justice Department’s Tax Division, including its tax enforcement efforts against ARL and its customers, may be found at www.usdoj.gov/tax.