July 11, 2002
For Immediate Release
P R E S S R E L E A S E
Edward H. Kubo, Jr., United States Attorney for the District of Hawaii, and Eileen J. O'Connor, Assistant Attorney General of the United States Department of Justice Tax Division, in Washington, D.C., announced today that a federal grand jury returned a three (3) count indictment against ROYAL LAMARR HARDY aka Royale LaMarr Sounet, a resident of Honolulu, Hawaii. As alleged in the indictment, HARDY, age 46, is charged together with other individuals in two (2) separate conspiracies to defraud the United States Department of Treasury, Internal Revenue Service, through various tax evasion schemes promoted and sold for his financial benefit throughout the United States since 1985. The indictment alleges that the first of the two conspiracies began in 1985 and continues to the present day.
The indictment further alleges that URSULA A. SUPNET aka Ursula Ann Sounet, age 44, MICHAEL L. KAILING, age 56, FRED M. ORTIZ, age 58, TERRY LEROY CASSIDY aka Shawn Michaels aka Leroy Terry Hefley, age 50, were co-conspirators with HARDY and promoted and sold various tax evasion schemes through an organization called "The Cornerstones of Freedom Research Foundation", but also known as the "The Cornerstones of Freedom" and "The Research Foundation". One of the alleged schemes, the "Reliance Defense" consisted of a package containing promotional materials, news articles, opinion letters, cartoons, and other false and fraudulent representations that United States citizens are not required to file income tax returns or pay income taxes.
The indictment also alleges additional schemes, including the sale of fraudulent bankruptcy filings, the sale of annual statement packages in lieu of filing federal or state income tax returns, and a trust scheme whereby HARDY facilitated the fraudulent transfers of funds held in individual retirement accounts (IRA), disguising transfers as legitimate, qualified roll-overs of retirement monies all for the purposes of evading the payment of taxes.
The indictment further alleges that HARDY and his co-conspirators sold these tax evasion schemes to individuals residing in Hawaii, Alaska, Washington, Oregon, California, Texas, Florida, South Carolina, Michigan and elsewhere.
It is also alleged that HARDY concealed substantial income by requiring cash payments, blank money orders, and checks with payee lines left blank or directed the payments of personal expenditures through the use of nominees to obtain expensive vehicles and for the payment of HARDY's personal rent of $9,000 per month in cash. The indictment alleges that HARDY has not filed or paid taxes since at least 1992 and arranged for the creation and sale of a false passport to facilitate the use of an offshore bank account in the Cayman Islands.
HARDY and SUPNET both face a maximum penalty of up to ten years of imprisonment and a $500,000 fine for the two charged conspiracy counts. KAILING, ORTIZ and CASSIDY face maximum penalties of five years of imprisonment and a $250,000 fine upon a conviction on the charged conspiracy.
United States Attorney Kubo stated that indictments are not evidence of guilt, and that all defendants are presumed innocent until and unless proven guilty.
This criminal investigation was conducted by the Internal Revenue Service,
Criminal Investigation, United States Department of Treasury. The prosecution
is being handled by Special Attorneys Edward E. (Ted) Groves and Thomas
J. Krysa of the United States Department of Justice, Tax Division, Western
Criminal Enforcement Section, Washington, D.C.
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