IRS “Con”spiracy Charge in Montana
By Edward Snook with R.S. Errol
Billings, Montana – Henry (Hank) and Judy Matthies of Laurel, Montana were served superceding indictments on April 25, 2007, by U.S. Attorney Kurt G. Alme. The indictments charged Hank with two counts of “Willful Failure to File Income Tax Returns” for years 2000 and 2001 and both Hank and Judy with “Conspiracy to Defraud the United States” for the purpose of impeding, impairing, obstructing, and defeating the lawful government function of the Internal Revenue Service of the Treasury Department (IRS) in the ascertainment, computation, assessment, and collection of the revenue; that is, income taxes.
Hank and Judy Matthies
It is highly unusual to be served a superceding indictment without being served with the original indictment, which was sealed until the Matthies were arraigned on June 21, 2007. The original indictment charged Hank with 2 counts of “Willful Failure to File Income Tax Returns” for years 2000 and 2001. The IRS maneuvered to ensure the original indictment was handed down by the Grand Jury before the statute of limitations expired, for the year 2000, on tax day of 2007.
Conspiracy to Defraud is a Con
Attorney Jeff Dickstein so eloquently stated in his closing arguments in the now infamous “Joe Banister” trial – “A conspiracy to defraud is a con. You defraud someone when you convince them that what you absolutely know isn’t true is in fact true. You would have to trick them into believing what you know to be false is true. Trickery, deceit and craft. To conspire to defraud the United States means to directly interfere with or obstruct one of its lawful government functions. The purpose of a conspiracy is to defeat by misrepresentation, chicanery or to overreach those charged with carrying out the government functions.”
A close investigation into the Matthies’ history and belief system, something the government didn’t take the time to do, verifies that their actions were a matter of public record; therefore the government’s charges on conspiracy are ludicrous at best. Who’s conning who?
Objects of the Conspiracy
The indictment claims that Hank and his employer overstated the number of allowances to which he was entitled. Let’s dwell on this allegation for a moment. Hank Matthies did not overstate the number of allowances on the W-4 submission since according to the internal revenue code he could lawfully claim up to 9 allowances. Since allowances are not defined as dependents Hank was merely reducing the amount of withholding tax, which tax he knows is unconstitutionally applied to him, from his paycheck. It should be noted that in order for Hank to get a job he had to fill out a W-4. Most employers across this country are unaware that filling out a W-4 is voluntary according to the tax code; therefore they require a person to fill this out before they will hire them. Hank has always written “under duress” on the W-4 and he crossed out the statement “under penalty of perjury,” due to his insistence with being honest with himself and others. At anytime the IRS could have instructed both Hank and his employer to reduce the allowances administratively. He worked for the same employer for over ten years and not once did the IRS attempt to mandate a change in W-4 allowances. Who’s conning who?
Furthermore, the IRS claims that in order to conceal assets from government the Matthies’ transferred assets to trusts and held title to assets in trusts and in Mrs. Matthies name. They also claimed that the Matthies’ impeded and obstructed the IRS from determining and collecting the amount of income tax Hank allegedly owed them and the IRS claims these transfers were meant to create barriers from collection efforts and exempt income from tax. Let financial planners take note of these purported illegal activities.
The Matthies’ like most concerned families discussed the need for a trust in order to avoid the ravages of probate. In 1997, Hank told Judy to get the ball rolling on the trust and she did. The property deed in the trust’s name was filed with the County Clerk and Recorders office in accordance with the law. No trick, deceit or craftiness there. Since it was public record and if the IRS wanted to break the trust in order to collect what they say he owes, they certainly could have done that just as they illegally do thousands of times across the country every year. This writer is not aware of any law that forbids property to be held in trusts, in fact most prudent Americans use trusts to ensure that they leave an inheritance protected for the beneficiary when they decease. Who’s conning who?
The IRS claims that Hank filed income tax returns and amended returns reporting no income or deductions in order to conceal and mislead the IRS as to their actual income and deductions. This charge is preposterous since Hank filed the returns along with applicable affidavits citing U.S. Supreme Court cases he relied on to prove he wasn’t liable to pay a tax on income. If the IRS is stating that he filed these returns how is it possible that they are charging him with willful failure to file? Who’s conning who?
Additional charges state that in order to conceal income from the IRS, Judy Matthies would cash Hank’s payroll checks instead of depositing them in a bank account. The Matthies’ like so many other law abiding citizens declined to use a checking account due to an unpleasant experience with their banking institution thirty years ago. After being notified of an over drafted check and subsequent bank charge that was proven to be incorrect, Hank elected to deal in cash and live within their means. One would assume that there is still enough “freedom” left in this country to afford the Matthies’ this right. Hank and Judy Matthies are deeply religious people who firmly believe that their Creator has instructed them to be good stewards of that which their Creator provides them.
In order to facilitate check cashing the Matthies’ still have a savings account, solely for the purpose of operating in commerce. It is clear that any check cashed by a bank is set into a permanent record of the transaction. The savings account always had an adequate balance the IRS could attach at whim. They never levied this account but have the audacity to charge the Matthies’ for cashing checks. Due to this bank record how is it that they are being charged with concealing income? What law forbids citizens the right to cash checks? Think of all the payroll check cashing facilities across this country. Are these institutions conspiring against the government as well? The con in this case is trying to make people believe the Matthies’ are doing an illegal act when the act is totally benign – totally legal.
The overt acts must demonstrate that there were, in fact, criminal agreements between the Matthies’ and other known and unknown co-conspirators. Hank is charged with claiming nine allowances on the W-4. Where is the criminal agreement between him and his employer? The withholding form was completed, submitted to and accepted by his employer. Never was there an issue raised between Hank and the IRS regarding this submission.
The IRS further states that Judy purchased a 1994 truck with Hank’s earned income and applied with the State of Montana for title in her name. Subsequently, Hank submitted a statement to the Montana Department of Justice, Motor Vehicles Division, that he had no interest in the 1994 truck. This act was motivated by the Matthies’ in an effort to establish credit in Judy’s name in case of the untimely death of her spouse. This transaction is replicated by American families time and time again. All vehicle registrations are a public record sanitized with sunlight, with no hint of conspiratorial intent. Yet the con-artists continue the facade of flimsy charges against this hard working family.
Not stopping there the IRS stated that Judy transferred the truck to a trust, which she did indeed do after the trust was created. People transfer vehicles into trusts for many legitimate reasons, one of which is protecting themselves from lawsuits. She in turn purchased another vehicle which was titled in her name for the sole purpose of maintaining her personal credit rating. Is this totally legal transaction that is of public record a conspiracy? Again, who’s conning who?
Continuing the slate of charges, Judy is accused of transferring their house into a couple of trusts over a four year period of time. There is no intent or criminal agreement to conspire with anyone about their personal business as all of these actions are public record. Maybe the Clerk and Recorder who filed these documents is part of the purported conspiracy. How absurd!
The IRS then states that Judy paid the property taxes owed on the house that the trust owned. This is true, because the trust did not have a bank account and it was Judy’s responsibility to pay the taxes. There’s still no criminal agreement with anyone. It’s called financial responsibilities.
Now, with all of this said, Hank and Judy have studied the internal revenue code, Constitution, Bill of Rights, Supreme Court cases, case law, read many books, interviewed former IRS agents, attorneys and did extensive research on the internet regarding the assessment of income taxes by the IRS. Both determined that the method used by the IRS to apply the code to Hank was unconstitutional. He was never involved in revenue taxable activities.
Their research project gave them the knowledge that all taxing authority in the United States is derived from the United States Constitution. Contrary to conventional wisdom the Sixteenth Amendment conferred no new powers of taxation upon the federal government, and did not extend the taxing power to new subjects as a result of its alleged ratification.
Over the years there has been an evolution of the tax regulations to obscure the method of taxation ordained by the statutes rather than to clarify them. In addition, the writers of the tax regulations intentionally made the codes nearly impossible to navigate and understand. The only reason for this obfuscation of the laws and regulations is to cloud the issue regarding who is liable for the income tax, thereby enabling the unwitting compliance to a law that doesn’t exist.
Whether the law exists is of no consequence to the IRS. This is an agency that routinely operates under the color of law. They have no power to arrest a citizen for alleged violations of the tax code; therefore, they will arrive at their victim’s door with a local law enforcement officer to enforce the unlawful warrant. The agents in orchestration with the U.S. Attorneys create crimes where there is no intent to commit crimes, then they present their one-sided case to a grand jury that is clueless regarding the tax code and the related regulations. They complete their successful presentations without ever having to show the grand jury the law that doesn’t exist. With an ill-gotten indictment the IRS goes about trying to destroy families by causing financial ruin through legal fees, confiscation of assets by liens and levies and unbearable stress on family members. Many times this is the main purpose of their attack. Obtaining a conviction is just frosting on the cake.
Is it any wonder the IRS has not provided Hank or Judy Matthies with the statutes which requires them to file a return or requires them to pay a tax on income? Logically, if the IRS cannot provide them a copy of the law that is the basis of the indictment it follows that there are no grounds for prosecution of the alleged crimes.
Enter the tax division of the Department of Justice where the baton is passed to prosecutors that have tried and true methods of extracting convictions from uninformed juries. The defendants, armed with volumes of evidence upholding their innocence are blind sided by prosecutorial maneuvers that in effect strip all of their evidence from their defense. The main weapon used is the “Motion in Limine.” According to Black’s Law 6th Edition, “it is a pretrial motion requesting a court to prohibit opposing counsel from referring to or offering evidence on matters so highly prejudicial to the moving party that curative instructions cannot prevent a predispositional effect on the jury. Purpose of such motion is to avoid injection into trial of matters which are irrelevant…” What is irrelevant about there not being a law? Of course the information about the non-existence of the law would be highly prejudicial to the prosecutors; therefore, it is always automatically excluded with the judge’s blessing. Even if the jury was astute enough to ask to see the law the judge informs them that reading the law is not necessary and to follow his jury instructions, which almost always leads to convictions and is actually a form of jury tampering. In essence the DOJ and the judges are a part of the con. It’s not us conspiring to defraud them, it’s them conspiring to defraud us!
All Americans have a duty to obey the law. They do not have a duty to cower to the IRS, who in fact is an agency that routinely and illegally intimidates citizens with unbridled power. Where is it mandated that we are here to bow down to an agency operating under the color of law and that we obey their dictates when we know they’re false?
Hank and Judy Matthies are being charged with conspiracy because the IRS knows they don’t have to present direct proof of a conspiracy or prove a criminal agreement. The only thing they have to prove is an overt act that doesn’t even have to be unlawful. Cashing checks without a checking account comes to mind. Just grab a handful of hypotheses, throw them at the wall and see if any stick. This is the real con the IRS pulls off on an annual basis against scores of hard working American citizens and they accomplish this by using the complicity of uninformed juries.
In retrospect the IRS could have taken intermediary steps to capture alleged back taxes. This agency does that every day to many citizens through illegal methods such as notice of levy as opposed to court orders. Make no mistake about it, the mission of the IRS is to ensure “voluntary compliance,” which in itself is an oxymoron. The cost to the well intended taxpayer is inconsequential to the agency as they are known for intimidating anyone that falls out of line. They in fact take great pride in crushing elderly citizens, hard working wage earners and entrepreneurs. Their motive is to have their acts of financial rape spread far and wide in order to enhance their reputation for ruthlessness. The Matthies’ are far from affluent in material possessions. They work hard, live in a modest home tax appraised for approximately $51,000 and tend to their family. In the IRS manual these are characteristics of the ideal victim. The Matthies’ just want to see the law that doesn’t exist. Where is the con in that motive?
The IRS, DOJ and the judge involved in this case are sorely mistaken if they think threatening Hank and Judy Matthies with prison and supervised release, plus fining them $250,000.00 will make them change their minds. That’s absolutely not going to happen. Hank and Judy know the truth about the IRS and the income tax. They know, as does this writer that absolutely no law exists that requires them to pay such a tax and they are going to stand on the truth. The Matthies’ are honest, law abiding Christians and they recognize when they’re being conned.
The IRS wants us all to believe that a husband and wife cannot discuss the way they want to handle their personal, household and financial affairs. Nothing could be further from the truth. Our personal, household and financial affairs are absolutely none of their business. We all have the right to privacy and have the right to be secure in our houses, papers and effects as per the 4th Amendment. The IRS denies that these constitutional rights even exist.
Recent Court Cases Prove the Matthies’ Position
Shreveport, Louisiana – A federal jury found Shreveport, La. Attorney Tommy Cryer not guilty on July 11, 2007 of two misdemeanor counts of failure to file income taxes and dismissed two felony charges of tax evasion prior to trial. Cryer was represented by renowned tax attorney Lowell (Larry) Becraft Jr. of Huntsville, Alabama. Mr. Becraft is currently representing Hank and Judy Matthies in their battle with the IRS and their case mirrors that of Cryer’s.
Cryer stopped filing income taxes 10 years ago and challenged the government for years on the legality of filing federal income taxes. He said the court could not list any laws that make his revenues taxable. The IRS and the US Attorney’s Office were unable to produce any law, simply because none exist.
San Jose, California – Ex-IRS criminal investigator Joe Banister was indicted on or about November 18, 2004 on one count of conspiracy, three counts of willfully aiding, assisting, counseling, and procuring the filing of an amended tax return which was false with regard to a material matter. Banister was acquitted on June 23, 2005.
Mr. Banister was an IRS agent earning $80,000.00 annually, who began to study the Income Tax Code and discovered it did not apply to most American citizens and that it was being enforced by the IRS and Government of the United States illegally. When Banister questioned his superiors about his findings he was asked to resign. According to Observer sources Banister was devastated when he discovered that he had taken part in wrongfully destroying the lives of innocent people based on a law that didn’t exist.
This ongoing battle is not about money. Most certainly not for the IRS and absolutely not for the Matthies’. For the IRS (government) it is about power and control. The government has an endless flow of money at its disposal. For Hank and Judy it is about principle, morals and doing what is right. It would have been more cost effective for them if they would have voluntarily filed and paid. They continue to be embroiled in this battle in hopes of leaving a better country for their children, grandchildren and future generations of all Americans.
Who’s Conning Who IRS?
Editor’s Note: If you have been targeted by the IRS and have a case against you pending, contact us immediately!