Chapter 15: IRS Investigation

Ring ... Ring

Ring ... Ring

“Damn phone. No one should be calling us at 4:00 AM in the morning unless it is an emergency. Have you seen the phone Tara?”

“It’s where it always is Jon, on the nightstand on my side of the bed.

“Hello Tara speaking.”

“I need to talk with Jon Reppa immediately!”

“Here Jon, he wants to talk with you.”

“Who is it?”

“I don’t know, he didn’t say.”

“This is Jon.”

“Jon, this is George Lyle. Sorry about the time, but I didn’t think this should wait.

“This morning, I found out that the IRS has been investigating you and is about to arrest you for suspicion of Income Tax Evasion.”

“What?”

“Yes, that’s right, Income Tax Evasion.

“I’m sorry about this, but back when I set Tyler on you and the others, he decided to tell the IRS that you had been selling an immense amount of bullion, and that you had failed to report a portion of your sales to the IRS.”

“Shit! You know what the IRS is like, Guilty until you prove yourself Innocent. How the hell can I prove that I didn’t sell bullion to someone and not report it?”

“I don’t know Jon. If it helps any, I will be happy to explain to the IRS about what was going on back then and let them know that to the best of my knowledge, neither Tyler nor I had any information on unreported sales. If push comes to shove, Tyler will have to provide evidence of the sale he claimed you made and failed to report.”

“Did you get any information about when they planned to arrest me?”

“No, not specifically. My informant said the Special Agent in charge of the investigation needed to get final approval and a warrant, and she expected the agents to make the arrest as soon as they get the warrant.”

“Well that is at least something. I need to talk with Harry and Sam about this.

“This may not have been directly your fault Lyle, but I am at least appreciative that you let me know about the situation before it blew up in my face.”

After hanging up the phone, I decided to let Sam and Harry sleep in. There was nothing that they could do in the next few hours that couldn’t be done later in the morning.

While I had been talking with Lyle, Tara had made coffee. Since I was up, I went out to the patio area next to the pool to think, and Tara brought my coffee to me there. As the sun rose over the mountains, I wondered why trouble always seemed to come my way on a beautiful morning. Why couldn’t it happen on a damp, dismal day; at least angry, dismal looking clouds would match the mood of how I was feeling? Damn IRS would believe anything and charge you with a crime without evidence. Actually, I knew that wasn’t true in most instances, and if that was true, what did they find that led them to believe that I wasn’t reporting my income?

Four cups of coffee later, I concluded that maybe it wasn’t my personal income that they had a problem with; maybe it was the Ark Foundation’s taxes. That made more sense to me for as the owner of the Ark Foundation, they would come after me if they had a problem with the income and/or deductions of the Ark Foundation’s tax returns.

Now regardless of the why they were after me, I had to decide how I should handle this problem. It seemed to me that I had two options. I could wait until the IRS got around to arresting me or I could approach them. If I waited for them to act, Murphy would ensure their timing was the worst possible place and time for me. If I approached them, maybe I could head off the arrest before it went too far and caused a lot of trouble for everyone.

I made it to the office by 7:00 AM, and that was early for me. I had worn my Bond Mates Joan and Tara out in bed last night, so I doubted that Joan would be into the office before 8:00 AM. Sam was usually in his office by 6:00 AM and Harry normally made it in by 8:30 at the latest. Sam would be busy taking care of the inevitable construction problems that came up last night, so I didn’t want to interrupt him until Harry made it into work. I didn’t have a problem with their hours for they typically worked until about 6:30, or later.

I called Harry’s office at 8:00 and he answered.

“Harry, we have another problem. Let Sam know that it would be nice if I could talk with the two of you as soon as possible, but if he is busy with construction problems have him join us as soon as he can.”

Harry made it to my office, but without Sam. Of course, Harry was the one most involved in the Ark Foundation’s finances, so he was the one I thought would be the most helpful.

“What’s going on now Jon?”

“At 4:00 this morning, I got a phone call from Undersecretary George Lyle. He informed me that the IRS would be arresting me shortly for Income Tax Evasion. Since then, I have been racking my brains to recall anything that I might have done on my personal tax returns that might justify being arrested. The only thing I can think of is there must be a problem with the Ark Foundation’s tax returns. Can you think of anything that would result in my being arrested?”

“Sorry Jon, nothing comes to mind. We had many problems when we first setup the foundation, but once the IRS came to accept our explanations, things settled down. Occasionally, they will have a few questions, but a phone call usually clears up the problem. The main thing that comes to my mind is the Ark Foundation is a tax-exempt organization and our reported income barely covers our expenses, so how is it that they would expect us to pay taxes on income we don’t make.”

“What worries me Harry is they are seeking an arrest warrant, and you don’t get warrants without some form of proof.

“How should we handle this?”

“Handle what?” Sam said as he came into my office.

Harry explained things to Sam, and Sam just looked at me. I could tell from their body language that both of them were trying to figure out why the IRS wanted to arrest me.

Bob interrupted my thoughts with, “Would you like me to look into this for you Jon?”

“Sure Bob, but where are you going to start. We don’t know who is seeking the arrest warrant or which group they work for.”

“Well, I was thinking of starting with Tyler, since Lyle said he was the one that started this. Once I know whom in the IRS he talked with, it should be fairly easy to follow the trail to the people currently involved in the investigation.”

“Alright Bob, go ahead and see what you can learn.”

I told Harry and Sam about Bob looking into the matter for me. I wasn’t hopeful for Bob could only read thoughts, so if Tyler didn’t think of the conversation he had with the IRS, Bob wouldn’t be able to pickup any information. That afternoon, Bob returned with the information I needed.

“How did you get the information so fast Bob? I recall you saying that you couldn’t read minds, and I didn’t think Tyler would be thinking of a meeting that happened over a year ago.”

“You are half right; I didn’t get anything from Tyler. I think you have confused our abilities with what we said when we met you. We can access a person’s mind. However, as we said when we met you, it is unethical for us to read a person’s mind, so we choose to only read the thoughts that they radiate.

“I got to thinking about the investigation. All investigations are conducted by the IRS’s Criminal Investigation Division. I linked with that group’s boss, and he was thinking about the investigations that were in progress. He was concerned about the arrest warrant that his investigators were getting in order to arrest you. From there I linked with the head investigator in charge of your investigation.”

“Oh. I hadn’t thought of doing that. What did you find out?”

Do you remember the bullion you used for your Bond Group’s necklaces?”

“Yes, what about it?”

“The IRS is saying that because you used Ark Foundation bullion for personal purposes, therefore, it should have been reported as income. Since your tax return did not reflect the bullion as income, they are saying that you failed to pay the taxes on the value of the bullion.”

“Oh! I guess I need to call Harry and tell him what you found out.”

“I wouldn’t do that Jon. I also learned that the IRS has a wire tap on your phone line and they have been recording everything that has been discussed on your home phone and on the Ark Foundation’s phone lines.”

“What have they found out from the wire taps Bob?”

“Actually, they didn’t find out anything incriminating. However, they do have hours of recordings of the discussions our buyers had with the suppliers of the merchandise we are buying. They also have a large number of recordings of you talking with your Bond Mates about what they plan to do to you when you get home from work. I understand that the IRS’s Investigators have photos of your Bond Mates and are jealous of you. Some of the Investigators pin a photo of the Bond Mate you are talking to on a bulletin board and they fanaticize her doing to them what she describes doing to you.”

“When do they plan to arrest me?”

“That’s not clear Jon. They are having a problem getting the arrest warrant approved, so it will be at least two or three days before they can serve it on you.”

“Thanks Bob, I’ll talk with Harry in the morning.”

The next day, I asked Harry and Sam to join me in my office. After explaining what Bob had learned about the bullion and phone tap, I asked what they recommend I do.

Sam said, “We have a problem Jon.

“The three of us know that Bob and Sharna gave the bullion to you to use for the Ark and Ark Foundation, as you deemed necessary. They knew what you were using the bullion for and had no problem with it. Harry and I are in the same situation, but our orders were much smaller so the IRS probably overlooked us during their investigation, which to me means the jeweler didn’t volunteer any information.”

“Sam is right Jon. My advice to you is that you tell the IRS that you are a member of the group that finances us and you bought the bullion from your fellow members. If they question you on the price, tell them that you got it at cost, which was a very low price. We all used bullion from our reserves that the IRS doesn’t know about. The number of pounds of bullion we reported as being received from our benefactors matches the number of pounds we sold. You can say that you have been paying off the purchase as a long-term loan and they can’t disprove that.

“Now let’s see, 10 pounds of gold and 10 pounds of platinum. Give me a moment while I compute the value of that much bullion back in 2036.

“Alright that would come to around $1.6 million. Jon, you were a multimillionaire before you met Bob and Sharna, and you have been one as long as I’ve known you. You can claim your group sold the bullion to you for $350,000 and gave you 3 years to pay off the debt. They would have to do a very detailed audit of your personal finances to prove that you didn’t make any payments. I doubt you have kept your personal financial records of bills and other disbursements that would be necessary to conduct such an audit. If you have, get rid of them now.

“Remember Jon, in a court of law it is not what you suspect, but what you can prove. That is true in the IRS courts also. They cannot bring charges against you without some evidence of wrongdoing. Granted in their courts, if they have some proof, it is up to you to prove your innocence. The only thing that they seem to have against you right now is that you gave the jeweler 20 pounds of bullion. That is highly unusual, but not a crime. In fact, that may be why they are having trouble getting that warrant.”

“Alright Harry, I’ll play it your way. What should I do, be passive and wait for them to come and arrest me, or take the offensive by going and talking with them?”

“Now that is a good question Jon. If it were me, I would keep them off balance.

“Normally, a person is not aware that they are about to be arrested until the Investigators arrive with a warrant in hand. If you were to show up in his office and ask why the IRS wants to arrest you for Income Tax Evasion, you would knock him off balance. You would really send him for a loop if you gave him the specifics of what they know, and then hit him with the explanation that we just discussed.