Tax court reversal `incredible'

[iamfreeru2]

Judge alters secret finding in fraud trial.

I just received this today in an email, however, I can not post the entire article as written, as it is copyrighted. I am in the process of getting a link to the article now, which appeared in the Chicago Tribune, yesterday, June 24, 2005, which in part is paraphrased below.

In the 1970s and 1980s, Burton Kanter of Chicago earned a reputation as one of the nation's top estate tax lawyers, representing wellknown clients

In 1999, a U.S. Tax Court judge ruled that Kanter and two of his business partners were engaged in a fraudulent kickback scheme that deprived the Internal Revenue Service of more than $30 million.

The tax court judge wrote that he had adopted the findings of the original trial judge, who determined that they had underpaid taxes after a lengthy trial.

Two years later, Kanter died, still believing he had done nothing wrong.

If Kanter were alive today he would have learned only last month that the trial judge ruled in his favor, but that finding--kept secret under tax court rules--was reversed by the U.S. Tax Court judge in his official court opinion.

The article shows that the "tax court judges" are liars bent on rulling falsely in favor of the IRS and against innocent victoms. The post above is not an exact quote from the article, but you can see that the tax court lied in it's opinion. I hope to have the link soon. If anyone else has a link to it please post it.

People basically stated in the article that they are beside themselves as to why the tax court would do such a thing. Gee I wonder why!! Could it be they have conspired to keep the truth from being known. Sounds to me like the status quo.

Corrupt Judge Ruling

Another Version


There ya go.

Now, where did I put that rope?

Henry Franklin

[iamfreeru2]

Henry, thanks man!! I tried to go on the Tribune and get it, but they wanted to charge me for it. Thanks for putting this up here for us all to see.

[sadie]

Thanks for trying Henry but can't read unless you subscribe.

[sadie]

Here is a link with some info on this



http://www.rcfp.org/news/2005/0310-sct-ussupr.html

[sadie]

Can't get link to work here is that story.

U.S. Supreme Court rejects secrecy in tax proceedings
The U.S. Tax Court, where taxpayers challenge the IRS, must disclose reports by special trial judges, the nation's highest court ruled in reversing two federal appellate court decisions.
March 10, 2005 -- The U.S. Supreme Court Monday invalidated the U.S. Tax Court's "idiosyncratic" practice of concealing special trial judge reports from taxpayers who appeal the court's rulings.

In a 7-2 decision, the high court held that the Tax Court's rules do not allow it to shield such reports from the record during appeals. The decision reversed judgments from the 7th Circuit in Chicago and the 11th Circuit in Atlanta upholding the Tax Court's practice.

Following a 1984 rule change, the Tax Court has withheld the reports as part of a collaborative effort between a special trial judge -- an auxiliary officer named by the Tax Court's chief judge to hear certain cases -- and a Tax Court judge appointed to oversee such cases.

"The Tax Court's practice of not disclosing the special trial judge's original report, and of obscuring the Tax Court judge's mode of reviewing that report, impedes fully informed appellate review of the Tax Court's decision," Justice Ruth Bader Ginsburg wrote for the majority.

The case marked a posthumous win for well-known tax lawyer Burton W. Kanter, who with two others was found liable for a $30 million tax deficiency in 1999, The New York Times reported. The Hollywood-connected Kanter, who died in 2001, and Prudential Life Insurance real-estate executives Claude M. Ballard and Robert Lisle were charged with conducting a kickback scheme in the 1970s and 1980s in which Prudential clients paid corporations controlled by Kanter. The payments were then distributed to the three men, who allegedly failed to report the income on their individual tax returns.

Kanter, Ballard and Lisle challenged the Internal Revenue Service's charges to the U.S. Tax Court in Washington, D.C. The cases were consolidated, and the court appointed Special Trial Judge D. Irvin Couvillion to preside over the 1994 trial. Under Tax Court Rule 183, Couvillion submitted a post-trial report of his factual findings and his opinion to the Tax Court, which assigned Tax Court Judge Howard A. Dawson Jr. to review it.

In 1999, Dawson issued a Tax Court decision that said it "agrees with and adopts the opinion of" Couvillion and attached a 600-page document titled "Opinion of the Special Trial Judge." Concluding Ballard, Kanter and Lisle had deceived the IRS, the Tax Court held them liable for underpaid taxes.

Kanter's attorney, Randall G. ****, later learned that the opinion did not reflect Couvillion's original report. In a sworn statement, **** said two other Tax Court judges told him Couvillion actually had found that Ballard, Kanter and Lisle did not owe certain taxes or penalties, but that Dawson had changed Couvillion's findings.

The businessmen then asked the Tax Court for Couvillion's original report or, alternatively, permission to place it under seal in the record of appeal. The request was denied. The parties appealed to three different federal appeals courts, based on where they lived. The Fifth, Seventh and Eleventh circuits agreed with the IRS that Couvillion's signature on the Tax Court's final decision meant it reflected his report, and that the original report was confidential. Ballard and Kanter appealed to the U.S. Supreme Court.

The high court rejected the conclusions of the federal appeals courts. Instead, it determined that nowhere in Rule 183 does it say the Tax Court can treat the special trial judge's original report "as a draft subject to collaborative revision." Moreover, the Tax Court's own rules require it to generally defer to the findings of the special trial judge, who was the one to hear the testimony and observe the witnesses.

"One would be hard put to explain . . . how a final decisionmaker, here the Tax Court judge, would give '[d]ue regard' to, and 'presum[e] to be correct,' an opinion the judge himself collaborated in producing," the Supreme Court ruled.

The IRS had argued in support of the practice, which the Court noted was "curious" given that it enabled the Tax Court to shield findings by a special trial judge that favored the government rather than the taxpayer.

Taxpayers use traditional courts to battle the IRS if they sue to recover paid taxes. People who want to contest IRS determinations before paying use the U.S. Tax Court, according to The Associated Press.

(Ballard v. Commissioner of Internal Revenue; Attorney for Petitioners: Stephen M. Shapiro, Chicago, Ill.)

[weishaupt1776]

From the Chicago Tribune

Judge alters secret finding in fraud trial
By Maurice Possley
Tribune staff reporter
June 24, 2005
During the 1970s and 1980s, Chicagoan Burton Kanter earned a reputation as one of the nation's top estate tax lawyers, representing an eclectic group of clients, including Hugh Hefner, Bobby Hull and Sam Zell, as well as rock groups Santana and Creedence Clearwater Revival.
But in 1999, a U.S. Tax Court judge ruled that Kanter and two of his business partners had engaged in a fraudulent kickback scheme that deprived the Internal Revenue Service of more than $30 million.
The tax court judge wrote that he had adopted the findings of the original trial judge, who determined that they had underpaid taxes after a lengthy trial.
Two years later, Kanter died, still believing he had done nothing wrong.
Had he lived, Kanter would have learned last month that the trial judge actually ruled in his favor, but that finding--kept secret under tax court rules--was inexplicably reversed by the U.S. Tax Court judge in his official court opinion.
Lawyers and law professors familiar with the case are stunned by the disclosure.
"How could the tax court judges essentially lie about what was in the report?" said Julie Roin, a law professor at the University of Chicago who has followed the case.
"I find it incredible. ... It makes you wonder what's going on," Roin said.
The dispute provides a rare look inside the court, located in Washington, D.C., and, according to tax experts, raises questions about the credibility of the court's decision-making process in what often are multimillion-dollar cases.
D. Irvin Couvillion, a special trial judge for the tax court, oversaw the trial of the case in 1994 and filed his findings in 1998. Pursuant to normal tax court rules, those findings were sent to Tax Court Judge Harold Dawson for review and issuance of a final decision.
Dawson found that there had been a fraud, stating in the first paragraph of his decision that he "agrees with and adopts the opinion of the Special Trial Judge, which is set forth below."
But last month, after a five-year court battle, Couvillion's original findings were made public and revealed that Couvillion actually had found there was no fraud and rejected the multimillion-dollar IRS claim against Kanter and his partners, Claude Ballard of Florida and Robert Lisle of Texas.
The matter is particularly troubling because in 2000 then-Chief Tax Court Judge Thomas B. Wells, Dawson and Couvillion issued a court order stating that "after a meticulous and time-consuming review of the complex record in these cases, Judge Dawson adopted the findings ... of Special Trial Judge Couvillion."
Statement contradicted
Couvillion's finding contradicts that statement.
"The court order--that's a total lie," Roin said. "It strikes me as institutionally destructive to lie. ... I find this all mysterious. I don't understand what they have to gain by lying. It just seems bizarre."
Dawson, reached by telephone at his judicial chambers in Washington, said, "I'm not free to discuss this and I don't have any comment to make.
"It's up to the [U.S.] Court of Appeals. It's pending there. I think it would be inappropriate for me to make any comments."
"The case is still in litigation and I think it would be unethical for me to make any comments," Dawson said.
Efforts to reach Wells, who is no longer the chief judge but remains a tax court judge, and Couvillion were unsuccessful.
Randall ****, a San Francisco attorney who represents Kanter's estate, said, "I am aghast at what has happened. After 35 years of trying these cases, believing that taxpayers got a fair adjudication, I have found out I was wrong."
At the core of the dispute is the tax court's practice of assigning special trial judges to oversee trials, listen to evidence and make findings. The special trial judges are appointed by the chief judge of the tax court and have no fixed term of office, unlike tax court judges, who are appointed by the president to 15-year terms.
If a contested case involves more than $50,000, the trial judge's findings are sent to the chief judge, who then sends the findings to a tax court judge, who reviews the findings and issues the official ruling.
Under tax court rules, the reviewing judge may adopt the trial judge's report, modify it or reject it completely.
However, the rules also require that a reviewing judge must give "due regard" to the trial judge's assessment of witnesses and that the findings of the trial judge "shall be presumed to be correct."
Until 1984, trial judges' findings were made public, but at that time the rules were changed to keep the trial judges' findings secret and not part of the court record.
Since then, as noted in a March 2005 ruling by the U.S. Supreme Court that ordered the disclosure of Couvillion's finding, there has never been a disclosure in any case as to whether the final decision was a modification or rejection, in part or entirely, of the trial judges' finding.
Couvillion was assigned to hear the trial and after listening to witnesses in 1994, he submitted his findings in favor of Kanter and his partners in 1998 to then-Chief Tax Court Judge Mary Ann Cohen, who reassigned it to Dawson.
Couvillion's report said he found the witnesses at trial to be believable and credible. "[T]he court cannot find or conclude that [IRS's] claimed kickback schemes existed or ... that there was fraud," Couvillion's opinion stated.
In December 1999, Dawson issued his decision finding against Kanter, Ballard and Lisle, saying that witnesses found credible by Couvillion were, in fact, unreliable. Dawson's ruling characterized Kanter's testimony as "implausible."
No explanation offered
There has been no explanation offered as to why Dawson ruled against Kanter based in part on gauging the credibility of witnesses he never saw.
"Judge Couvillion was a fact-finder in terms of credibility findings and he cannot be overturned by another judge who doesn't hear the evidence," said Steve Brown, the Chicago lawyer for Ballard and Lisle. "You can't change findings without rehearing the witnesses.
"The central part of a fraud case is the credibility of witnesses. How does he [Dawson] know? He wasn't even there."
**** triggered the court battle over Couvillion's judicial findings by filing an affidavit in 2000 saying that two other tax court judges tipped him off that Dawson's decision was not a confirmation of Couvillion.
"I was vilified for filing that affidavit," **** said. "Now I feel like a whistleblower on a process that is secret. I am shocked and dismayed at the tax court. This justifies Mr. Kanter. [Dawson's] opinion was a proximate cause of his early death."
Beyond the finding by Dawson, there remains the question of the court order in which Dawson and Couvillion stated that Dawson's ruling affirmed Couvillion's trial finding, **** said.
"I think there is an absolute arrogance in Tax Court that they could do whatever they wanted to do without reporting to anyone--in secret," **** said.
Leandra Lederman, the William W. Oliver professor of tax law at Indiana University School of Law in Bloomington, said the disclosure of Couvillion's report "does raise questions. Has it happened before? How many times has it happened before?"
"I think it leads to questions about what was going on behind closed doors," she said.
Lederman, who filed an amicus brief in the case urging release of Couvillion's findings, said the practice of keeping such findings secret is a "lack of transparency. And that leads to a lack of accountability. Transparency not only protects actual fairness, but the appearance of fairness, which is needed for people to have confidence in the system."
Richard Pildes, a New York University law professor who also represented Kanter, said, "There's no way to know from the public record whether this went on in one of these cases or hundreds of these cases. It's such a betrayal of the public trust."
----------
mpossley@tribune.com
Copyright © 2005, Chicago Tribune

[weishaupt1776]

Follow Up to it

By Maurice Possley
Tribune staff reporter
Published June 25, 2005
The chief judge of U.S. Tax Court declined on Friday to discuss revelations that call into question the decision-making process of judges who oversee tax disputes between citizens and the IRS.
In a brief telephone interview, Joel Gerber, a Chicago native who was appointed to the tax court in 1984 and named chief judge in 2004, said, "No judge will be able to discuss this. There is no way."
Last month, the 1998 finding of a trial court judge that now-deceased Chicagoan Burton Kanter and two business partners had not engaged in tax fraud and had not failed to report income to the IRS was disclosed after a five-year legal battle. That ruling, kept secret under tax court rules, was reversed in 1999 by Tax Court Judge Harold Dawson, who issued a public opinion that found Kanter and the others had engaged in fraud and owed more than $30 million.
Dawson, in his ruling, said he "agrees with and adopts the opinion of the Special Trial Judge, which is set forth below." In fact, Irvin Couvillion, the trial judge, had not found fraud.
Tax experts find the statement misleading at the least, and Julie Roin, a law professor at the University of Chicago, characterized the court order as "a total lie." Particularly troubling to those familiar with the case is an order issued in 2000 by then-Chief Tax Court Judge Thomas B. Wells and signed by Dawson and Couvillion, which states that "after a meticulous and time-consuming review of the complex record in these cases, Judge Dawson adopted the findings ... of Special Trial Judge Couvillion."
Wells and Couvillion could not be reached for comment. Dawson has said he believes it would be "inappropriate" for him to comment.
The U.S. Supreme Court in March ordered Couvillion's 1998 finding to be made public and criticized the tax court's 1984 rule that said such findings should be kept secret.
Also Friday, Kanter's son Joshua called for reform to end the court's policy of keeping trial court findings secret. "The tax court has some work to do. Or Congress does. Somebody has work to do to bring transparency to the tax court," he said. "This is a vindication of my father. I wish he were here to see it."

[iamfreeru2]

Oh well, so much for being concerned about the copyright. Thanks for putting it up Weis. I had it, just did not want to possibly violate the copyright on it by posting the article itself.

[Livefire]

That article shows it in spades.....Abolish that puppet court along with its puppetmaster IRS!!!!