-Caveat Lector- <A HREF="http://www.ctrl.org/"> </A> -Cui Bono?- http://www.worldnetdaily.com/bluesky_fosters_news/20000315_xnfos_7_years_he.shtml THE POWER TO DESTROY 7 years of hell at hands of IRS Accountant: Case against inventor is characterized by 'massive fraud' By Sarah Foster © 2000 WorldNetDaily.com Seven years after its unannounced raid on his home, the Internal Revenue Service is still demanding that an Alabama inventor fork over $2 million it says he owes in back taxes. The problem: Robert C. MacElvain, a retired engineer as well as inventor, hasn't got $2 million and, according to Vicki Osborn, a forensic accountant in Colorado Springs, Colo., who is helping him with his case, he doesn't owe it anyway. "If anything," Osborn told WorldNetDaily, "the IRS owes Mr. MacElvain more than $2 million since the actions lodged against him were based on massive fraud and misrepresentations to the court." In 1993, MacElvain, then in his mid-60s, had his home and property confiscated by the IRS, claiming he hadn't filed a return since 1980 and owed $2.2 million in taxes. "It wasn't true," says Osborn, "but the agents told the judges that it was. [Federal District] Judge Ira DeMent even sentenced him to prison for three years based on what he was told by the agents on the case. Virtually everything they swore in that courtroom was a lie. There wasn't any truth to it." Raided without warning For over 40 years the MacElvains had lived quietly in Eufaula, a historic town 90 miles southeast of Montgomery on the Alabama-Georgia border. Their home is a one-story, 19th-century house they bought "years ago" and restored themselves. They have two grown daughters. MacElvain had invented the diamond-bit Hydra-Drill in the early 1960s, which revolutionized deep rock mining. He and his brother formed a business for manufacturing the new product. From careful investing of the royalties, he became a very wealthy man. He also worked as a geologist for the State Geological Survey in Tuscaloosa for a number of years. "He utilized in a brilliant manner the laws Congress enacted to minimize his tax impact," Osborn says. "Not a single action he took was unlawful." On the morning of Jan. 21, 1993, the day following President Clinton's inauguration, IRS agents -- armed with a writ of entry sworn out the day before -- swooped down without warning on the MacElvains' home and began confiscating their property. In an exclusive interview, Robert MacElvain recalled the events of that day and the one following for WorldNetDaily -- events he said were "burned into our consciousness and will probably be there for quite some time." MacElvain didn't hear the agents when they arrived, he said. It was raining and he was in the attic fixing leaks in the roof. Alone downstairs, Mrs. MacElvain heard knocking at the front door, and when she opened it found herself facing a small but threatening group of people. They identified themselves as being from the Internal Revenue Service and stormed into the hallway. "I'm a little hard of hearing, and at first I didn't hear my wife's voice," MacElvain said. "When I did, I couldn't make out any words, only I could tell she was in distress. I climbed down [the ladder] and found her in a state of shock, surrounded by a squad of six or eight what they call special agents from the IRS. They had picked up a local policeman from the police department. He was uniformed and armed, and I knew the others had guns." MacElvain said the agents were unmasked and didn't brandish their weapons, but "it was intimidating to say the least." "I was shocked out of my bootstraps to see them in our home," he said. "The agent in charge was a woman -- her name is Fran Keith; she had all but ripped the anniversary ring from my wife's hand," MacElvain recalled. It was a diamond ring he had given his wife on their twenty-fifth wedding anniversary in 1980. "Lynne told me later that was the first thing she demanded," said MacElvain. "She really wanted that ring. Lynne was terrified and handed it over. If I had been there and seen that, I think I would have gone insane. I couldn't have stood it." The agents shoved papers in the MacElvains' faces, he said, saying they were authorized to seize the house and its possessions for "underpayment of taxes," and ordered the couple into a back room to wait for hours while their home was torn apart. Swarming through the rooms, the agents tagged every object down to the girls' old dolls and the family Bible. Silver, jewelry, antique furniture, knickknacks -- everything the MacElvains had acquired over the years. From that moment on, it was the property of the federal government. Deputy sheriff laughs At one point, MacElvain called the Barbour County Sheriff's Department for help, but the deputy who answered the phone found the situation funny. "I told them the IRS hadn't any right to do what they were doing, and the guy I talked to said, 'If it's the federal government, they can do whatever they want.' Then he laughed." Movers arrived the next day, packed everything up and hauled it away in a van. MacElvain's car, a 1990 Hyundai, was towed to a holding yard. Mrs. MacElvain herself tried unsuccessfully to stop the federal action. At noon the second day, her attorney phoned the house and told agent Keith that she should cease the seizure and leave the premises as Mrs. MacElvain had filed for Chapter 11 bankruptcy. Since the house and possessions were in fact in her name, continuing the action was a violation of federal bankruptcy law and there should have been an automatic stay. Keith phoned her supervisor and after a lengthy discussion the supervisor ordered her to continue the seizure. The MacElvains were allowed to continue living in their home. The following year a family member bought it from the government so they would have a roof over their heads. Two weeks after the raid, the IRS sent a copy of the inventory. According to MacElvain, "Some items of substantial value never made it to the inventory, much less to the auction -- like the household silver flatware." The household property was sold at auction for $65,000 the following November -- a mere pittance against the $2.2 million the Revenue Service said were owed in back taxes, plus penalties and interest. A relative managed to buy the family Bible. Matters might have settled down then, but the IRS had other plans. In 1989, MacElvain and a partner had bought Fulton Iron Works, an old factory in St. Louis that manufactured heavy-duty equipment, in particular, sugar cane presses. They had between them 30,000 shares of common stock in the new corporation. At his partner's request, MacElvain was holding his partner's shares for him temporarily. At 5 p.m. on Feb. 18, 1993, just a month after their property was seized, the IRS tacked a notice on the MacElvains' front door announcing that the stock and the factory in St. Louis would be sold at auction the following day at 1:00 p.m. -- in just 20 hours. MacElvain and his partner were able to raise $134,000 in the time alloted, but it wasn't enough. The representative of a Pakistani national showed up with $135,000. Feb. 19, the day his company was sold, was Robert MacElvain's 64th birthday. Normally and legally, a seizure and sale like that requires a minimum of 10 days. In response to questions raised by MacElvain's attorney, the IRS claimed its authority for selling on short notice was 26 USC Sec. 6336: Sale of Perishable Goods. But stock and a company are hardly perishable goods. Agent Fran Keith explained in a letter that they had information that the interest was of "considerable value," but might be rapidly decreasing. "Keith had information from someone, somehow relating to the value of the stock," said Osborn, "and that information has never been provided to Mr. MacElvain. Whoever provided the information to the service has not come forward, but there is no way that any human being can justify appropriate notice and due process for the sale of corporate stock within a 24-hour period." His next action was, MacElvain admitted, "a mistake." Distraught at what had been done to him, in September he filed commercial liens against those who had seized his property, including Fran Keith who led the action and four local contract vendors who helped: the locksmith, the mover, the appraiser and the towing company. The IRS was brutal in its response, apparently worried that leniency might encourage what it perceived as a "trend." "This kind of activity is consistent with advice that is passed along by tax protester groups," said the IRS in a press release. MacElvain denies being part of any such organization and eschews the "tax protester" label the revenue service has hung on him. "I'm completely non-political," he said. He was indicted on six counts of "corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws." In February, 1994, a jury convicted him on the charges relating to the contractors, but cleared him of criminal wrongdoing for filing a lien against Keith. He was sentenced to three years in federal prison, which he served. The IRS wouldn't let go. A judgment was entered in a court action in early 1998, for $2 million, plus interest and penalties amounting to several more million -- a ploy to extend the 10-year statute of limitations on collections that was about to expire. At age 71, MacElvain foresees years of indebtedness to the IRS. "They're taking what amounts to a non-judicial proceeding -- their claim of millions of dollars against me -- and having it confirmed by the court in a civil action so that instead of having only six or 10 years to come after me they can come after me for 20 or 30 years 'til the day I die," he said. "That's going on right now. They've taken everything I have, put me into debt to people who helped me, and then they've put millions of dollars on top of that. That's a pretty deep hole to work out of, especially at my age." Hoping to have the civil action nullified, MacElvain has appealed the judgment, but Judge Ira DeMent refused to set it aside. "I guess I'd have to say if they were keeping score it would be IRS, 99 -- Bob MacElvain, 0," he quipped. Darkness to light A year ago he heard about Vicki Osborn and contacted her for help. Today, he credits Osborn with whatever progress has been made in his case, saying otherwise he'd be "very much in the dark." Osborn holds degrees in accounting and finance and is expert in the use of computers. She has, in her words, "years of working with businesses, helping them find out where they're failing on their financial end." It's only recently that she has become involved with IRS cases, which she views as a natural extension of her 25-year career in computer systems and financial management. Originally from Alabama and with relatives still there, about two years ago Osborn's brother, an architect, heard that a friend and fellow architect, Jack Mizell, was struggling in an IRS quagmire. Knowing his sister's work, he suggested to Mizell that he contact her -- which Mizell did. It was her first case, and opened the way for introductions to three other IRS victims who wanted help -- one of them was Robert MacElvain. She works closely with her husband, Richard, on the cases -- crediting him with being the "computer genius" of the team and the main researcher -- the one able to locate obscure documents. Her forte is an ability to assemble all the tiny pieces of the puzzle. As a forensic accountant she must be able to look not only at numbers, but behind them. "In all four cases, I found overwhelming evidence of fraud," she reports. After accepting his case, Osborn carefully read "every single one" of the thousands of documents MacElvain sent her: transcripts of depositions, trial testimony and hearings; correspondence; memos and interagency reports; and a printout of his individual master file. The individual master file is an arcane, computer-generated document that shows by a system of numerical codes all transactions between the revenue service and a taxpayer -- audits, investigations, levies, liens, penalty assessments, tax assessments, and notices of deficiency that tell how deficient a person is in his tax payments. The date of each transaction is recorded in two different forms. According to Osborn, the master file is the only thing that carries greater weight than an agent's word in administrative and court proceedings. Yet even in his master file, fraud was apparent as evidenced by the removal of significant codes and the backdating of transactions to make them appear to fall within the statute of limitations, she said. Here are a few of her findings regarding his case: The day before the raid on the MacElvain home, agent Fran Keith gave a sworn affidavit to the court in order to obtain an order of entry. In her affidavit she asked that Mr. MacElvain not be notified ahead of time because the IRS knew he was had been concealing his assets for years and might attempt to hide his possessions if he got wind of the raid. "This was a false charge," said Osborn, "made without any supporting documentation." In her affidavit, Keith swore that notices and demand were sent on certain dates -- after assessments had been made. "But this is what the trick is," said Osborn. "The law requires that a notice of deficiency must be sent prior to an assessment. Those were not sent. Instead, they made the assessment, then they sent the notices and demands. But notices of deficiency were never sent." In her sworn testimony at MacElvain's criminal trial, Keith said she knew nothing about the statutory notices. "Once I receive a case, an assessment has been made so I cannot testify to any notices that were sent or in any assessments that were made prior to my receiving the case," she testified. Says Osborn: "The trial testimony is the evidence that Keith lied to the court to get the writ of entry that allowed her to seize Mr. MacElvain's property. That was done on a fraudulent affidavit. Her affidavit is proven to be fraudulent by her trial testimony or the other way around. "Either way they twist it, it's clear she perjured herself in one or other of her testimonies: Either the affidavit is false or her trial testimony is false" Osborn remarked. In obtaining a grand jury indictment against MacElvain for filing liens, John Thomas, Jr., was the sole witness for the IRS. He never told the grand jury that the agents had violated federal bankruptcy laws by continuing with the seizure after Mrs. MacElvain's attorney had obtained an automatic stay. He also described MacElvain as a tax protester and told the grand jury that he never filed tax returns, that he never paid taxes. "That was every bit a lie," says Osborn. "The master files clearly show that Mr. MacElvain paid his legitimate taxes. And there is nothing to indicate he was a tax protester." By law, assessments cannot be made unless the taxpayer is provided with a notice of deficiency. IRS didn't do that, Osborn discovered, but it did put a hold on his individual master file -- then began levying his state retirement account and his Social Security. Actually, MacElvain had two editions of his individual master file: One he had requested and received in 1994 during the time he was facing an indictment; the second was obtained by Osborn in April of last year. On comparing the two, she noticed significant differences. The first edition showed a series of payments the revenue service had been levying from his social security and state retirement during a period of litigation -- which is illegal. "You can tell they're liens because each one has a two-digit code called a designated pay code with it -- which in this case is 05, meaning they were liens," Osborn explained. In the second edition, which is in the same format, but updated to April 1999, the transaction codes have been stripped out. "Someone from the service -- between 1994 and 1999 -- went into Mr. MacElvain's master file and removed the designated pay codes that indicated the payments were made by way of levy," said Osborn. "The money was forcibly taken by levy during litigation, which is unlawful. The taxpayer did not voluntarily make the payments. These show up as money that's been paid, but without the code there's no evidence the money was taken forcibly. There is no code indicating voluntary payment -- so if there's no code, supposedly the transaction was voluntary." IRS responds The charge of removing the pay codes is serious. For comment, WorldNetDaily contacted the IRS Gulf Coast District office in New Orleans. Public Affairs spokesperson David McWhorter said he could not discuss the case per se, since it was in litigation, "But I can say that when there is the kind of tampering -- as you call it -- with the master file, that is something that we take extremely seriously. There are now because of the Restructuring and Reform Act of 1998, that is one of the misconducts that are mandated to be punished by removal, meaning termination of employment." Osborn is not optimistic that that will happen, even with all the evidence she has assembled. However, she has been able to get MacElvain's Social Security payments reinstated, though the IRS is still taking his state retirement. "It's big money to get even a few hundred dollars a month," he said, "And the first positive thing to come up in the case." As it stands, MacElvain and Osborn hope to have the case reviewed by another judge. Judge Ira DeMent has been the judge not only on the various motions and consistently ruled against MacElvain, but he presided over the MacElvains' trial regarding the commercial liens. It was DeMent who sentenced him to three years in federal prison. In August, MacElvain filed a motion for a stay and reconsideration of the $2 million judgment, and a hearing to review based on new evidence of fraud. Less than a month later Judge DeMent denied the motion, with no reason given. Osborn and MacElvain asked him to recuse himself voluntarily for conflict of interest, but he never responded. Last week he and Osborn requested Harold Albritton, Chief Judge of the U.S. District Court for the Middle District of Alabama, Northern Division to appoint another judge in DeMent's place and grant a hearing to review the evidence of fraud. Judge Albritton gave the revenue service until March 24 to respond. Besides the case of Robert MacElvain, Osborn is handling that of Jack Mizell -- which also deals with fraud. Both cases are in district court pending a decision about whether to reopen them now that fraud can be shown. "If those cases are reopened because of what we discovered, do you know what that means?" she asks rhetorically. "That will be a first time ever. It will be a landmark opportunity for people -- and we would have done it by ourselves, pro se. Without an attorney. It would be really incredible." Sarah Foster is a staff reporter for WorldNetDaily. © 2000 WorldNetDaily.com, Inc. -- ----------------------- NOTE: In accordance with Title 17 U.S.C. section 107, this material is distributed without profit or payment to those who have expressed a prior interest in receiving this information for non-profit research and educational purposes only. 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