CERTIFIED PUBLIC ACCOUNTANT AND REDDING BUSINESS
OWNER CHARGED IN TAX CONSPIRACY
SACRAMENTO--United States Attorney McGregor W. Scott and IRS Criminal
Investigation Special Agent in Charge Roger L. Wirth announced today
that a federal grand jury has returned a seventeen-count indictment
charging JOSEPH BANISTER, 41, of San Jose, California and WALTER A.
THOMPSON, 57, of Redding, California with multiple tax crimes.
BANISTER and THOMPSON each are charged with one count of conspiring
to defraud the United States by impairing and impeding the Internal
Revenue Service with regard to approximately $259,669 in income and
employment taxes during the period of July, 2000 through December 31,
2002. In addition, BANISTER is charged with three counts of aiding
and assisting the filing of false tax returns for THOMPSON for the
1996, 1997 and 1998 tax years.
In addition to the conspiracy count, THOMPSON is charged with two
counts of filing false claims with the IRS, one count of filing a
false income tax return with the IRS, and ten counts of willfully
failing to collect and pay over approximately $176,215 in taxes from
the wages and salaries of employees.
This case is the product of an extensive investigation by the
Internal Revenue Service, Criminal Investigation Special Agents.
According to Assistant United States Attorneys Robert M. Twiss and
Carolyn K. Delaney, who are prosecuting the case, the indictment
alleges that THOMPSON owned and operated Cencal Sales ("CENCAL"), an
aviation flight bag manufacturing business located in Shasta Lake,
California. CENCAL employed a number of hourly wage workers who were
predominantly seamstresses, production managers or office workers.
BANISTER, a Certified Public Accountant ("CPA") and former Special
Agent in the Criminal Investigation Division of the Internal Revenue
Service, is alleged to have entered into a conspiracy with THOMPSON
to remove employees of CENCAL from the taxpayer rolls by no longer
withholding employment taxes from wages and salaries, not filing
Employer's Quarterly Tax Returns, Form 941, and not providing the
employees or the IRS with annual wage or other income statements,
Forms W-2 or 1099, as required by law.
The conspiracy count alleges that on July 21, 2000, THOMPSON falsely
advised CENCAL employees that the compensation which they received in
return for their labor was not "income" within the meaning of the
internal revenue laws and that they were not required to pay
individual income taxes on the compensation which they received from
CENCAL. THOMPSON stopped withholding income and employment taxes from
his employees in July of 2000, and stopped filing Employers'
Quarterly Tax Returns and Forms W-2 at the same time.
The indictment further alleges that there was a second meeting on
October 11, 2000 at which THOMPSON and BANISTER again falsely advised
CENCAL employees that the compensation which they received was
not "income" and that they were not required to pay individual income
taxes on those wages. BANISTER assured the employees of CENCAL that
THOMPSON would not lie to them regarding the tax issues.
The indictment further alleges that BANISTER prepared false Amended
Individual Income Tax Returns, Forms 1040X , for THOMPSON and his
spouse for 1996, 1997 and 1998. THOMPSON had filed returns for these
three years, reporting over $300,000 in total income for the three
years and substantial taxes. The amended returns purported to reduce
the amount of income and tax in each year to $0, and sought refunds
of approximately $65,000 for 1996 and 1997, and to eliminate a tax
liability in the amount of $15,500 for 1998. THOMPSON signed and
filed the fraudulent amended returns with the Internal Revenue
Service at the Fresno Service Center.
Ten counts of the indictment charge THOMPSON with willfully failing
to deduct, collect, account for and pay over to the IRS those federal
income and employment taxes due on the wages paid to the employees of
CENCAL between July 1, 2000 and December 31, 2002.
"The blatant and far-reaching defrauding of honest taxpayers by these
two individuals warrants an aggressive federal prosecution. This case
should serve as a stark reminder to our citizens that caution should
be heeded when approached by those advocating wild theories as to why
one does not have to obey federal tax laws," stated United States
"Joe Banister, a former IRS agent, knew exactly what he was doing.
Tax professionals and employers who break the law will be held
accountable," said IRS Commissioner Mark W. Everson.
According to IRS Criminal Investigation Special Agent in Charge Roger
Wirth, "Taxpayers shouldn't be taken in by false descriptions of the
law or misrepresentations of the facts. Dozens of taxpayers were
adversely affected by the actions of Mr. Banister and Mr. Thompson."
If convicted of all counts with which they are charged, the maximum
penalty to which defendant BANISTER could be sentenced is
imprisonment for 14 years and a fine of $1,000,000. The maximum
penalty to which defendant THOMPSON could be sentenced if convicted
of all counts is imprisonment for 68 years and a fine of $3,500,000.
The charges are only allegations and the defendants are presumed
innocent until and unless proven guilty beyond a reasonable doubt.
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The chief enemies of republican freedom are mental sloth,
conformity, bigotry, superstition, credulity, monopoly in the market
of ideas, and utter, benighted ignorance. Adderley v. State of
Florida, 385 U.S. 39, 49 (1967) Decision by Justice Black.
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