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After Being Convicted of a $100 Billion Tax Fraud, Skipping Your Sentence to Hit the Links Is the Next Logical Step

Posted on by Caleb Newquist

If you had recently been convicted of a $100 billion tax fraud and it were the day of your sentencing, how would you spend those last hours of freedom?

Visiting with friends and family, perhaps? Taking one last tumble in the sack with your beloved? Walking your dog? Eating at your favorite restaurant? Squeezing in a couple more episodes of Orange Is the New Black and/or Oz to get yourself mentally prepared?

While those suggestions are all perfectly fine, George Brokaw, John Pawelski and Mimi Vigil had a different idea. They wanted to squeeze in one last round of golf, which isn't a bad idea. 

But then they decided to skip the whole sentencing altogether:

During the carnival-like atmosphere in U.S. District Court on Thursday afternoon, U.S. District Judge Christine M. Arguello granted a request by convicted tax cheats George Brokaw and John Pawelski to postpone their sentencing hearings then threatened extreme measures against Mimi Vigil if she didn't behave.
 
"If you are disruptive next time, I'm going to have you gagged," Arguello said sternly as three U.S. Marshals handcuffed Vigil and escorted the grinning woman out of the courtroom.
 
The three Colorado Springs defendants were arrested Thursday after they failed to appear for sentencing Wednesday. They were escorted into court Thursday afternoon in handcuffs, all wearing street clothes.
 
"We did go golfing. I shot a 49, which was pretty good for me," Pawelski told the judge after she emphasized the seriousness of the felony charges he faced.
Going out on a high note! Nicely done, John.
 

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Will JK Harris and TaxMasters Join the Tax Lady in the Late-Night-Tax-Problem-Solver Body Count?

“Pennies on the dollar” may be a great pitch on cable television, but it’s not a surefire business plan. Desperate taxpayers who have paid money up front to JK Harris to resolve their tax debts at a discount are joining the IRS as potential “pennies on the dollar” creditors now that this leader in the tax settlement industry is filing for bankruptcy protection.

This is the second major blow this year to cable TV ad revenues. Earlier this year “Tax Lady” Roni Deutch gave up her law license in the face of charges that she took fees up front to resolve tax debts and failed to follow through.

Tax nerds see the late night ads when we get home and wonder how these outfits manage to get such great deals out of the IRS when getting the Service to actually forgive tax debts is like pulling teeth from a grumpy rhino for the rest of us.


TaxMasters now stands as the biggest remaining player in the TV tax settlement business, but they have their own problems. They were de-listed last month from the OTC Bulletin Board to the pink sheets for failing to file their 10-Q due August 15. The last reported trade for Taxs.pk is at 13 cents. They have also been sued by the Minnesota Attorney General for allegedly deceptive practices. ABC News reported on the suit:

The Minnesota attorney general says many of the company’s employees are skilled tele-marketers who have little knowledge of the complicated tax issues faced by people who have fallen behind in filing their returns or making tax payments. “When you call, you think you’re talking to a tax professional,” said Swanson. “You’re really talking to just a salesperson who’s trying to get you to sign up.”

So maybe the secret is that the late night settlement outfits are staffed by telemarketers who just happen to be awesome at selling pennies-on-the-dollar deals to the IRS. If that’s true, though, they seem to be having a lot of trouble turning what would truly be a remarkable and valuable skill into profits.

Sex Change Expenses Are Deductible but You’re on Your Own for the C Cup

He seemed to have it all — a wife, three kids, a successful career. But it wasn’t enough. What he really wanted was another X chromosome. Our taxpayer, explains the Tax Court, “was uncomfortable in the male gender role from childhood and first wore women’s clothing secretly around age 10…discomfort regarding her gender intensified in adolescence…[The taxpayer] was a female trapped in a male body, and continued to secretly wear women’s clothing.”

So our taxpayer consulted a licensed social worker, which is apparently how these things are done, and after suitable counseling, decided to try on XX for size. The first steps down the path the the Misses Department seemed to suit the taxpayer, so he took the next big leap. $21,741 of surgical and related expenses later, the taxpayer was Ms. Rhiannon O’Donnabhain.


The Tax Court got involved when she deducted these expenses on her 2001 tax return. The IRS said that the expenses were not “medical” expenses under Sec. 219. It would be an unusual man who would undergo this sort of thing absent dire medical need: “The procedures that Dr. Meltzer carried out included surgical removal of the penis and testicles and creation of a vaginal space using genital skin and tissue.”

It took 139 pages and 4 separate opinions, but the Tax Court agreed that the gender reassignment surgery is a deductible medical expense. It’s surprising that it was so difficult, considering that the court is largely composed of men who wear dresses at work. But they felt it was necessary to go into the sort of privacy-killing detail that makes taxpayers think twice before spurning an appeals offer and going to Tax Court (oh, you mean you’re that Rhiannon O’Donnabhain!):

Petitioner, anticipating the formal recommendations for her surgery, went for a consultation and examination by Dr. Meltzer in June 2001 at his offices in Portland, Oregon. Dr. Meltzer concluded that petitioner was a good candidate for sex reassignment surgery. Dr. Meltzer’s notes of his physical examination of petitioner state: “Examination of her breasts reveal [sic] approximately B cup breasts with a very nice shape.”

Nice enough for government work, anyway. The Court ruled that while the hormone therapy, vaginoplasty, feminizing facial surgery and penis and testicle removal were deductible, breast augmentation was, well, too much:

given the contemporaneous documentation of the breasts’ apparent normalcy and the failure to adhere to the Benjamin standards’ requirement to document breast-engendered anxiety to justify the surgery, we find that petitioner’s breast augmentation surgery did not fall within the treatment protocol… Instead, the surgery merely improved her appearance.

So if the Tax Court’s view holds up on appeal, you can deduct the cost of changing sides, but if that’s not enough to make you sufficiently hot, you’re on your own.