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As if Eddie Kahn didn't have enough trouble

May 27, 2010

Eddie Kahn had a starring role in Wesley Snipes' tax planning, but all he got for his trouble was a ten-year tenancy in the federal pen. Now it looks the feds will be extending his lease. From a Department of Justice Press Release:

Four promoters of a Florida-based business that sold fraudulent tax schemes were convicted today of selling worthless "bills of exchange" for the purpose of impeding the Internal Revenue Service (IRS) and promoting other schemes to orchestrate tax fraud, the Justice Department and IRS announced today. The evidence at trial showed that the four and their employees manufactured over $1 billion in fictitious financial instruments purporting to be drawn on the U.S. Treasury.

Eddie Ray Kahn, Stephen C. Hunter, Danny True and Allan J. Tanguay, all of Florida, were found guilty after an 18-day trial. Jerry Williamson, who was charged in the same case, pleaded guilty in April of 2009 to one count of mail fraud for sending a fictitious bill of exchange purporting to be drawn on the U.S. Treasury. Chief Judge Royce Lamberth in Washington, who presided over the trial, set sentencing for August 30, 2010.

Mr. Snipes used the "bill of exchange" nonsense in the unwise tax planning that got hime a three-year sentence (currently under appeal) for failing to file tax returns.

All four men were convicted of conspiracy to defraud the United States and to commit mail fraud in the operation of American Rights Litigators/Guiding Light of God Ministries (ARL). In addition, each defendant was convicted of one or more counts of mail fraud. The evidence at trial showed that Kahn founded and ran ARL from 1996 through 2004. During that time, ARL enrolled more than 4,000 customers from all 50 states and the District of Columbia.

What sort of people paid good money for such bad advice? Quatloos explains the ARL market niche:

Eddie Kahn of "American Rights Litigators" represents the Hee-Haw contingent of the tax protestor movement...Eddie caters to the dumbest of the dumb, and his theories for not paying taxes are thus the dumbest of the dumb. Eddie has claimed variously that he can't find the Form 1040, that the IRS was not created by Congress and apparently just materialized out of the blue, that the IRS doesn't have the power to collect taxes, that the United States doesn't actually include the states, but is actually limited to the District of Columbia, that all the money collected from taxes goes to the International Monetary Fund (Eddie doesn't say who pays for our aircraft carriers, but what the hey), and that so long as keep out of the Social Security Program that you'll never have to file taxes... It seems that if somebody has tried a theory, lost, and then gone to jail than Eddie will then take it and advocate it as gospel.

While Mr. Kahn's theories may be the "dumbest of the dumb," they have something in common with all of the other tax protester theories, from "sovereign citizen" to "there is no law" -- they never work. It doesn't matter what your favorite "tax honesty" guru says about the federal tax. It's what the federal judges, federal marshals and federal prison wardens say that counts.

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