Tax Questions Raised Regarding
Gold and Silver Coins Used to Pay Wages
Around noon on Monday, September 17th , a Las Vegas federal jury returned its verdict refusing to convictnine defendants of any of the 161 federal tax crimes they had been charged with. The charges included income tax evasion, willful failure to file and conspiracy to evade taxes.
The four-month trial centered around the family businesses of Robert Kahrewho paid numerous workers for their labor with circulating gold and silver U.S. coins, and did not report the wages. The payments took place over several years, allegedly totaling at least $114 million dollars.
On September 20, 2007, three days after the federal trial's dramatic conclusion, the Las Vegas Review Journal, reportedly under a degree of public pressure, ran its first (and last) story about the outcome of the trial. To this day, with exception of the single article by the Review Journal, no major media entity has published a news story regarding the outcome of this important federal criminal tax case.
The censorship of this important news story is, unfortunately, not unexpected given the continuing, worldwide onslaught against the U.S. "dollar" -- specifically the Federal Reserve note variety, and the ever growing numbers of Federal Reserve Notes required to trade for an actual ounce of silver, gold, oil, or for that matter, anything.
In short, this failed prosecution has coalesced and exposed truths our government desperately needs to hide from the People: the truth about our money, the truth about our (privately-owned) central bank, and the truth about the fraudulent nature of the operation and enforcement of the federal income tax system, the Internal Revenue Service.
Click here to read the April, 2005 DOJ press release announcing the prosecution.
According to defense attorney Joel Hansen, who represented co-defendant Alex Loglia, the primary "willfulness" defense was that the defendants believed they had no legal obligation to withhold, pay income taxes or report anything to the government because, in part, the nominal (i.e., face value) of the gold and silver coins is so small as to fall beneath the reporting thresholds set by the Internal Revenue Code.
The Defendants also argued that regardless of the valuation of the coins for internal revenue purposes, there is no law that requires average American workers to file or pay direct, un-apportioned taxes on the fruits of their labor.
The Government argued that the payments in solid gold and silver U.S. coins must be considered at their bullion (i.e., intrinsic full-market) value when considering the worth of the wages for purposes of the internal revenue code.
Attorney Hansen cited two Supreme Court cases bolstering Defendant's monetary argument at the heart of the defendants "willfulness" defense.
The essence of the argument is that under the Constitution Congress is obligated by law to mint and circulate such coins as demand requires, and must establish the value of coins as they are used as legal tender, but the coins' market value, arising as valuable personal "property," is a distinct, separate attribute of such coins, and is of no legal consequence if the coins are used as legal tender.
In other words, if a worker is paid with such coins, his taxable "income" (if any) can only be the face value indicated upon the coin money paid -- i.e., $1.00 for a circulating silver dollar or $50 for a circulating gold U.S. coin. Not surprisingly, the IRS has never issued any public guidance regarding this significant issue.
The first case, Ling Su Fan v. U.S., 218 US 302 (1910) establishes the legal distinction of a coin bearing the "impress" of the sovereign:
"These limitations are due to the fact that public law gives to such coinage a value which does not attach as a mere consequence of intrinsic value. Their quality as a legal tender is an attribute of law aside from their bullion value. They bear, therefore, the impress of sovereign power which fixes value and authorizes their use in exchange."
The second case, Thompson v. Butler, 95 US 694 (1877), establishes that the law makes no legal distinction between the values of coin and paper money used as legal tender:
"A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them."
Defense attorney Hansen confirmed that members of the jury were able to actually hold and inspect the gold and silver U.S. coins paid to the workers.
After almost four months of testimony and three and a half days of deliberation, the jury did not convict any of the defendants of any of the 161 crimes alleged. Although some defendants were acquitted of multiple counts, and several were acquitted completely, others may have to stand for a retrial if the Government brings charges a second time.
The Review Journal reported the jury foreman claimed DOJ prosecutors admitted they were "shocked" by the outcome.
In March 2007, the primary defendant, Bob Kahre, filed a federal civil rights lawsuit against the prosecutor and IRS agents who had conducted what he alleges to be an unlawful search and seizure raid. In 2005, the Ninth Circuit Court of Appeals refused to overturn a previous District Court ruling holding that the federal prosecutor is not entitled to absolute immunity for the unlawful raid. Read more.
Click here to execute a Google News search to attempt to locate recent news stories about the Kahre tax trial.
The media suppression of this story is similar to the widespread mainstream media suppression of the July 11, 2007 acquittal of Louisiana attorney Tommy Cryer who was also charged with multiple federal income tax crimes and relied upon numerous Supreme Court precedents and U.S. tax laws to establish his "willfulness" defense. Click here for a previous WTP update containing a link to Cryer's 100-page Motion to Dismiss which details his legal arguments.
Four-month trial ends with no convictions
Federal income tax evasion case involved nine defendants
By JOAN WHITELY
A criminal tax case alleging income tax evasion and conspiracy
dissolved in federal court this week, when a jury returned zero
convictions on 161 charges faced by nine defendants. Monday's verdict "sends a strong message," said defense attorney Lisa
Rasmussen, who represented Joel Axberg, a tile layer.
Informally called the Kahre case -- after the primary defendant,
local business owner Robert Kahre, who paid workers in gold and
silver coins -- the trial lasted four months. It relied heavily on
evidence gathered in a controversial armed raid in May 2003 on
several of Kahre's local business places. The raid entailed keeping
more than 20 workers handcuffed, at gunpoint, in 106-degree heat
without shade or water while agents collected records and equipment.
"Yeah, that's a pretty major victory," said defense lawyer William
Cohan. "If you go 0 for 160 (in baseball), they'd send you down to
the minor leagues."
Cohan was upbeat although his client, Kahre, was not acquitted of any
of his 109 charges. Rather, the jury hung on all of Kahre's counts.
The jury also hung on all counts faced by Kahre's sister, Lori Kahre,
and defendant Alex Loglia.
Four defendants acquitted of all the charges against them were
Axberg, Robert Furman, Ron Ruggles, and Kahre's mother, Myra Buonomo.
"It was the most wonderful feeling and the most wonderful day in
ages," Buonomo, 66, said of her acquittal. She said she works "more
or less as a runner" for her son's construction-related businesses.
Part of the case hinged on whether Kahre's workers were employees or
independent contractors, who are responsible for paying their own
Two other defendants, Dannielle Alires and Debra Rosenbaum, were
partly acquitted, with the jury hung on one count each.
Before trial, five additional defendants had pleaded guilty.
Michael Kennedy, who defended Lori Kahre, said the case turned on the
notion that taxpayers could be wrong without being criminal. He was
referring to the fact that his client, Lori Kahre, and other
defendants had not paid taxes according to the market value of the
precious metal content of the coins in which they were paid, as
opposed to their face value. He conceded at trial that his client may
owe federal taxes for her mistakes.
The Internal Revenue Service had never before provided guidance on
how to handle gold and silver coins that circulate, only on
noncirculating collectible coins, according to Kennedy, who is a
federal public defender. "If that's the case, we're not going to take
someone's liberty from them, on something that a (certified public
accountant) with a master's degree doesn't even know. That's a scary
country, and I don't live in that country."
J. Gregory Damm, the assistant U.S. attorney who led the prosecution,
declined to say whether the government will retry any of the five
defendants on the charges that resulted in a hung jury. Damm referred
the newspaper to Natalie Collins, public affairs specialist for the
U.S. attorney's office in Las Vegas.
Acting U.S. Attorney Steven W. Myhre issued a statement through
Collins that thanked jurors, investigators and prosecutors."Ultimately, the responsibility lies with the jury to decide whether
the government met its burden of proof in the case and we accept
their decision." He said the office will "soon decide" whether to
retry any defendants.
Jurors got stuck on the question of whether the government had proved
defendants intentionally violated tax law, according to David
Ramirez, jury foreman. "Oh my God, the willfulness is very hard to
prove, as we found out," Ramirez, 49, said Wednesday. "That was the
hard part, especially in the conspiracy charge." Ramirez works in
management for the U.S. Postal Service.
The government "did not present one witness who agreed with the
conspiracy theory," said attorney Joel Hansen, who defended Loglia.
Currently unemployed, Loglia did paralegal work for Kahre.
The jurors favoring acquittal varied by defendant, Ramirez said."Personally, I went guilty (on some counts) and some, not guilty." He
said when the 12 jurors split on a count, it was usually a 6-6 or 7-5
Ramirez said the prosecuting team had a clear, although silent,
reaction to the verdict: "The head was hanging down, the shoulders
were low." He said "shocked" was the term some prosecutors used to
describe themselves when they talked to him after the trial.
Cohan did not want Robert Kahre, who testified during the trial, to
talk to reporters after the trial because his client and five others
still face additional charges in a separate criminal tax case set for
trial in January. That case alleges Kahre hid assets by having
relatives or friends buy property in their names using his funds.
Once the criminal cases are over, Kahre will pursue related civil
actions he has filed against several parties, including federal
prosecutor Damm, Internal Revenue Service agents and North Las Vegas
police officers who had roles in the raid or indictment process.
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