After months of wrangling with the government over tax evasion charges, Texas injection molding executive and tax protester Richard Simkanin got his day in court. The result: Jurors deadlocked over federal charges that Simkanin did not withhold taxes from his employees' paychecks and filed false refund claims.
Simkanin, who owns Arrow Custom Plastic Inc. in Bedford, Texas, remains in jail after a federal jury in Fort Worth, Texas, was unable to come to a decision Nov. 25. As a result, U.S. District Judge John McBryde declared a mistrial. The government expects to retry Simkanin, said a spokeswoman for the U.S. Attorney for the Northern District of Texas.
Simkanin argued during the trial that federal law does not require employers to withhold employee taxes, he's spoken at forums run by groups questioning the legality of the income tax, and he put his name on a full-page ad in USA Today in 2001 questioning the withholding requirement.
To the government, he's a dangerous figure. He's published warnings on the Internet about ``the fury of a fire'' against those who oppose him, said he had expatriated himself from the United States to the ``Texas Republic,'' and urged an anti-tax group in a private meeting to kill federal judges, according to court documents.
``Simkanin is part of a movement, that accurately could be referred to as a cult, whose members challenge the government of the United States to interfere with their activities and question the power of the government,'' McBryde wrote in an order in July denying Simkanin bail.
Prosecutors argued that Simkanin's arguments amount to a scheme to avoid paying taxes.
But Simkanin's lawyer, Arch McColl of Dallas, disputes that Simkanin threatened judges, saying the information is hearsay from an informant who is himself a disbarred lawyer.
McColl said his client read the tax laws and was unable to get an explanation from the government about why he had to withhold employee taxes. McColl said his client did not tell employees not to pay taxes.
Prosecutors declined to comment, but McColl said ``I don't think [the jury] had a lot of confidence in the government's case.''
McColl said this is not the first time the government has had trouble persuading a jury about Simkanin's tax claims. He said prosecutors called Simkanin before two grand juries, but both declined to indict him after he was allowed to present his case to them. Only after prosecutors took the case before a third grand jury earlier this year, where Simkanin was not allowed to speak, were they able to secure an indictment and move to trial, McColl said. The U.S. Attorney's office declined comment.
The fact that the case even came to trial is something of a surprise. Simkanin had pleaded guilty Sept. 30, with the understanding that he would serve up to three years in jail. But that plea agreement fell apart when the government said it made a mistake and that the charges would actually bring up to five years in jail. McColl said Simkanin took the initial plea because his wife is sick.
Simkanin turned down the new plea, however, and the trial began Nov. 24. Simkanin was charged with not withholding $175,000 in taxes on employee wages from January 2000 to December 2002, and filing false refunds totaling $234,000.
McColl said the trial was not about the legality of the income tax, but focused on questions of whether Simkanin's company had to withhold taxes.
McColl said Simkanin relied on professional advice that he did not have to withhold, but prosecutors noted that Simkanin's original accounting firm resigned when he stopped withholding taxes.