Ohio Supreme Court Justices – Tax Fraud

 

The following undisputed facts clearly proves that sitting Ohio Supreme Court Justices Thomas J. Moyer, Terrence O’Donnell, Alice Robie Resnick, Maureen O’Connor, Evelyn Lundberg Stratton, and former Justices Francis Sweeney, J. Craig Wright, Deborah Cook and Andy Douglas are guilty of tax evasion and/or underreporting income they earned from the personal use of state paid for cars.

 

Each and every fact set forth below was obtained from my review of public records provided to me by the Ohio Supreme Court and/or the State Auditor.

 

  1. In early 1993, Chief Justice Moyer employed special counsel to review tax liabilities, etc. regarding the purchase of state vehicles for the justices
  2. On June 1, 1993, special counsel sent Moyer a letter along with a lengthy memorandum dated May 20, 1993 regarding the issue
  3. The May 1993 memo advised Moyer that (a) personal use of car required to be reported on annual W-2, (b) mileage logs must be maintained to determine personal v official use, (c) commuting is considered personal use and must be included in Justice’s gross income and (d) personal use is subject to withholding of income taxes. 
  4. May 1993 memo went on to advise Moyer that, the tax liability would be based on the Annual Leas Value method
  5. On 09-29-93, justices pass resolution to purchase state cars; however, they  rule to not comply with IRS reporting rules or report income on W-2’s
  6. On 02-25-03, during the pendancy of audit, CJ Moyer issues updated resolution, which again allows for noncompliance with IRS reporting rules (W-2’s)

 

Supreme Court’s 1993 Resolution and Motion (Ex. B)

 

The following are excerpts of said resolution that you should find interesting regarding the Justices contempt and disdain for the Ohio Const. and US Tax Code.

 

WHEREAS, it is the sense of the Court that to say and accept the position of the State of Ohio that there may be no personal use of a state vehicle and yet to require a justice to pay federal income tax on “personal” use of a vehicle is entirely incongruous and not a proposition to which members of this Court wish to give purported validity.

 

1.         Each justice provided with an automobile shall include on her/his individual federal income tax return an amount equal to the value of the number of miles determined by each justice that the automobile is used for personal use times a figure of twenty-five cents being the value of for each mile driven.  (they knew because of the value of the luxury cars they ordered that, IRS Rules required the application of the Lease Value Method for payment of income)

 

4.         That whenever and wherever a vehicle provided to a justice is being used within the State of Ohio, such use is presumed to be in furtherance of the duties of the justice. 

 

These rules as promulgated by the Justices take pomposity and arrogance to levels unseen in the annals of American Jurisprudence!

 

State Auditor Findings of 02-17-04 re: Palmer’s 01-10-04 letter

 

An audit of the Court’s conduct as set forth above came about due to my investigation and submission of my findings to the Auditor.  The following are relevant excerpts of the Auditor’s investigative report and/or the Court’s correspondence to the Auditor.

 

Justices’ tax liabilities for personal use of cars:

Allegations:  Palmer asserts income for personal use of cars should have but did not appear on justices’ 2001 W-2 forms and they did not maintain logs detailing personal vs. business use as required to do.

 

Summary of Findings:  We reviewed IRS valuation methods summarized in memo and used by Palmer to make his calculations (on tax liability) and compared them to provisions of IRS publication 15-B.  We found that, irregardless of Palmer’s information, the IRS provisions discussed in the memo do indeed apply to the Court.  It appears the logic and methodology behind Palmer’s calculations is correct…

As to Palmer’s allegations that the justices’ W-2 forms should but do not disclose any taxable benefit from personal use of state vehicles, he is correct. 

 

01-20-04 Auditor Interview Notes of Court Administrator Steve

Hollon and Chief Fiscal Officer Ronda Perri

 

The following are relevant excerpts from said interview notes:

 

Personal Use of an Employer-Provided Vehicle

During our audit, the Court was not withholding taxes for personal use of state cars and was not requiring submission of logs detailing personal v official use.  The Court appears to have been in non-compliance (1993-2004) with IRS Publication 15-B. 

 

It is noted per IRS Publication 15-B that it, is the responsibility of the “Employer” to both notify its employees and include the personal use of a vehicle as income within the W-2 forms. 

 

Auditor’s Feb. 24, 2004 Management Letter

 

The following are relevant excerpts of said management letter:

 

The IRS, by way of the Internal Revenue Code (Title 26 of the United States Code), requires an employer to annually report all applicable wages and fringe benefits (perks) earned by its employees during the previous calendar year.  The IRS further holds that allowing an employee personal use of a business vehicle constitutes a taxable benefit which must be reported on the annual Form W-2. 

 

The Court itself does not monitor or account for any personal use of Court vehicles provided to the justices, and consequently does not report his information on the annual W-2 forms (as required) to the justices.  The Court also does not have any formal policies and procedures for the personal use of Court-provided vehicles by the justices.

 

Evasion/Underreporting of Taxable Income

 

Court Administrator Steven C. Hollon

 

Chief Justice Thomas Moyer assigned a 1995 Jeep Grand Cherokee to Hollon in 2000 and allowed him to use it to commute (158 miles roundtrip) from his home in Lebanon and also provided him with a state fuel card to purchase gas.  My review of Hollon’s fuel purchases led me to conclude that about 92% or more was for personal use.

 

  1. Fair Market Value of Jeep in 2001 was about $19,000
  2. Lease Value Method would equal about $5,350
  3. Fuel purchased by Hollon at public expense in 2001 was $3,163.44
  4. Tax liability for 2001 was about $8,343
  5. Hollon’s 2001 W-2 (Ex. G) shows he falsely claimed $648 in taxable income

 

I do not have a full record of Hollon’s 2000 fuel purchases; however from Aug. to Dec. he purchased 706.37 gallons of fuel and drove about 13,070 miles, almost all of which was commuting.  His 2000 W-2 discloses $0.00 income for personal use.  For 2002 Hollon falsely claimed taxable income on his W-2 of $367.50, meaning he falsely claimed that 85% of the use of the state Jeep was official business

 

Clerk of Court Marcia Mengel

 

In early 2000 Moyer assigned a 1995 Jeep Grand Cherokee to Ms. Mengel and allowed her to use it to commute 11.5 miles to work each day from her residence in Worthington, Ohio.  Mengel’s W-2’s disclose the following false information:

 

2000 – claimed $466 income when lease value proves it was about $7,200

2001 – claimed $560 income when lease value proves it was about $7,000

 

Ex-Justice Andy Douglas

 

In 1999 and 2000, Douglas’ W-2 “magically” discloses personal income for use of a Buick Ultra of $1,785; however, the lease value of the car along with fuel purchases was nearly $9,000.  Personal use was at about 95%, meaning his taxable income was $8,550.00 for both years.   These were the only two years Douglas’ W-2 discloses any income from personal use of a state car. 

 

 

Remainder of Active/Ex-Justices

 

Justices Tom Moyer, Alice Resnick, Evelyn Stratton, Maureen O’Connor, Terrence O’Donnell, Paul Pfeifer and ex-justices Francis Sweeney, Deborah Cook and Craig Wright’s W-2’s from 1993 to 2003 (copies available upon request) disclose $0.00 in income for personal use of state cars. 

 

My review of the fuel records of the above named justices (Wright excluded) led to the inescapable conclusion that 95-98% of their use of state cars/fuel was personal and/or for commuting.  The latest cars chosen by the justices at public expense are:

 

ü      Moyer – 2001 fully-loaded Buick Park Avenue Ultra - $37,745

ü      O’Donnell – 2000 fully – loaded Park Avenue Ultra - $35,228

ü      Resnick – 2001 Grand Cherokee - $30,952

ü      Pfeifer – 1999 Grand Cherokee - $32,752

ü      Sweeney – 1999 fully-loaded Park Avenue Ultra - $30,958

ü      Stratton – 2001 Ford Taurus - $19,196

 

My request to the Court for public records/information on the personal income earned by the justices for personal use of state cars has never been fulfilled.  Likewise, my request for logs differentiating personal v. official use has not been fulfilled.

 

Admission of Evading/Underreporting Income

 

The most telling admission by the Court that the justices were evading/underreporting income from personal use of state cars is contained at page 7 of Court Administrator Hollon’s Feb. 7, 2003 memo to CJ Moyer (Ex. C), which states,

 

Thus, it is possible some tax regulating authorities could conclude that we (employer) are to report the value of use instead of the Justices for tax year 2002.  The other consideration is that this issue is now on the radar screen of at least one tax regulating authority (e.g. the City of Columbus), and possibly others.  As such, you should be aware that reporting no or only minimal use of your assigned Court vehicle may not be accepted by those authorities without legitimate and detailed mileage logs.  This (i.e. reporting true income) will undoubtedly require more out of pocket expense (taxes) than the Justices may wish to pay, but it will eliminate any question about their tax obligations for this tax year. 

 

Need I say any more Mr. Scott?  Mr. Hollon, an acknowledged tax scofflaw said it all!

 

Other Public Employees

 

My review of W-2’s for the State Auditor, Attorney General and Secretary of State and other State employee’s shows that they reported $0.00 in personal income for their use of state cars.  This cannot in my opinion by true given the fact that said cars (e.g. Lincoln, Chrysler LeBaron, Lincoln Navigator and other SUV’s were permanently assigned to these and/or other public officials. 

 

It appears that noncompliance with IRS Rules (Publication 15-B) is and has been consistent throughout the State of Ohio for many, many years.  Moreover, recent reports in the Toledo Blade regarding ex-Lucas County Treasurer Ray Kest’s misconduct, leads me to believe that evading and/or underreporting of income for personal use of government vehicles is endemic and a standard practice in Ohio. 

 

CONCLUSION

 

It is indeed unfortunate that public officials, especially those entrusted with overseeing Ohio’s judicial system would engage in “serial” violations of the US Tax Code in an overt; albeit rather inept attempt to evade and/or underreport personal income.

 

Sadly, the justices of the Ohio Supreme Court appear to believe that they are a “special breed” in that they can collectively thumb their noses at US Tax laws.  Apparently, the justices are fans of Leona Helmsley who once said, “Only the little people pay taxes.”

 

 

Justice Terrence O’Donnell’s Magical $18,000 in Cash

 

Beginning on Feb. 24, 2005, the Columbus Dispatch, Cleveland Plain Dealer and Associated Press, among others began to report on O’Donnell’s claim to the Cleveland Police that someone broke into the state-owned 2000 Buick Ultra he was driving and absconded with $18,000 in $10 and $20 lying he deposited in the back seat.

 

O’Donnell’s explanation of the source of the $18,000 and the events leading up to the alleged theft is as follows:

 

  1. At the end of every day of his adult life (’66-‘04) he emptied his pockets, plunking leftover $10 and $20 bills into a container at his Cleveland home.
  2. Around Jan. 1, 2005, he discovered a water pipe had burst in one of his cottages in Catawba Cliffs, causing significant damages, some not covered by insurance.
  3. A month later (Feb.) a small fire damaged the other cottage and he decided not to report the damage to his insurer so his rates wouldn’t increase. 
  4. He then decided to use the $18,000 in leftover $10 and $20 to pay for repairs
  5. On the evening of the 14th or morning of the 15th of Feb., he deposited the $18,000 into a bag; it into a state car and left for Columbus to attend oral arguments scheduled for the 15th and 16th.
  6. Arrives in Columbus and deposits the cash in his apartment.
  7. Claims he arrived in Cleveland (137 mile trip) too late deposit cash in bank and leaves it in back seat of car while attending award ceremony at St. Edwards H.S.
  8. During award ceremony, someone breaks rear window of state car and removes item containing cash. 

 

 

The following is a history of O’Donnell’s earnings as an adult, which makes his claim of tossing “leftover” $10 and $20 into a dresser for 38 years even more absurd.

 

  1. 1968-69 – instructor-Cuyahoga Community College – est. salary $30,000
  2. 1970 – Elementary teacher at St. Brendan’s – est. salary $20,000.
  3. 1971-72 – law clerk Ohio Supreme Court – est. salary $25,000.
  4. 1973-74 – law clerk Court of Appeals – est. salary $25,000.
  5. 1975-76 – director-paralegal studies – Meyers College – est. salary $33,000.
  6. 1977-79 – associate Marshman, Snyder & Corrigan – est. earnings $40,000.

 

Judicial Earnings from 1984 to 2004

Year

Amt

 

Year

Amt

 

Year

Amt

 

Year

Amt

1981

$  43,500

 

1982

$  43,500

 

1983

$  55,500

 

1984

$  60,500

1985

$  62,500

 

1986

$  64,500

 

1987

$  71,250

 

1988

$  73,750

1989

$  76,750

 

1990

$  79,700

 

1991

$  83,200

 

1992

$  86,650

1993

$  86,850

 

1994

$  86,850

 

1995

$  94,200

 

1996

$  97,050

1997

$  99,950

 

1998

$102,950

 

1999

$106,050

 

2000

$109,250

2001

$112,550

 

2002

$115,500

 

2003

$115,400

 

2004

$136,800

 

Living Expenses/Liabilities

 

O’Donnell is married with 4 children all of whom attended College, all of whom attending College while 3 attended law school.  His bio and Financial Disclosure Statements (’00’03) reveal the following:

 

  1. Miami University – undisclosed debt
  2. Cleveland State University – undisclosed debt
  3. Case Western Reserve University – undisclosed debt
  4. Provident Bank – undisclosed debt
  5. U.S. Department of Education – undisclosed debt
  6. Dr. Stephen Cook (dentist) – undisclosed debt (’00-’03)
  7. First U.S.A. Bank – undisclosed debt
  8. Notre Dame – undisclosed debt
  9. John Carroll University – undisclosed debt (’00

 

Having raised 3 daughters, all of whom went to private school during the same timeframe that O’Donnell’s did (he’s 59, I’m 60) and I can assure you that based on his earnings and living expenses, his claim  of having leftover (unneeded) $10 and $20 bills on a daily basis for tossing into a dresser drawer is beyond laughable.

 

I, among others believe that the true source of the $18,000 in $10 and $20 was (a), (b) gratuities for past and/or future rulings or (c) money entrusted to O’Donnell for disbursement to others in Cleveland.  The source certainly wasn’t as O’Donnell claims!