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PAYROLL CONSPIRACY CASE: Jury gets income tax case

IRS requires using coins' market value

Jurors start deliberating today whether business owner Robert Kahre and several others willfully broke federal law by taking their pay in gold and silver coins, but reporting only the coins' modest face value on their income tax returns.

Jurors must examine two diametrically opposed portraits of Kahre that were painted during the trial, which has lasted almost three months.


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  • The 48-year-old Rancho High graduate, who has six construction businesses, is a man with a "portfolio of excuses" who was "on a mission of deception" to disguise his tax evasion, according to federal prosecutor J. Gregory Damm.

    Or, according to his attorney, William Cohan, Kahre is a brave sentinel who tried to fend off federal tax tyranny by exercising what he believed to be his right to go by the dollar value stamped on the post-1985 $50 gold and $1 silver coins he used for payroll.

    Kahre faces more than 50 counts on allegations that he evaded taxes, failed to turn over withholding taxes of workers and hid assets through real estate transactions.

    Judge David Ezra has instructed the jury that the law requires a taxpayer to go by the fair market value of such coins for tax purposes, not the much lower face value. But jurors must decide if Kahre and two others charged in the payroll conspiracy knew about that requirement and still chose to disobey it, which would form a criminal intent.

    The other two are Kahre's sister, Lori Kahre, who works for him, and Alex Loglia, a former business assistant.

    Jurors also must decide whether Robert Kahre and a fourth defendant, Danille Cline, who stays at home to care for their four children, hid taxable assets when they bought homes in her name using his income. The family lives in southern Utah, but has been renting a condo here during the trial, which began in mid-May.

    The prosecution and defense agree that Kahre did extensive research to shore up his tax beliefs. From financial analysts and lawyers around the country, he collected written opinions to support his views.

    But the two sides differ on why he did the research.

    "Selective research negates good faith," Damm said Tuesday in his closing argument.

    To demonstrate deceit, federal prosecutors cited one of the opinions. Floyd Wright, California author of a tax-related book, wrote to Kahre in 2000 that if he built a portfolio of such opinions, it would demonstrate good faith in his belief system, causing the Internal Revenue Service to find easier targets to prosecute.

    Cohan argued Tuesday that, although Kahre's mistaken belief doesn't exempt him from paying taxes, it prevents him from having criminal intent.

    To show Kahre's good faith, Cohan emphasized that defense witness Wayne Paul, a certified public accountant with 40 years experience, took no money from Kahre, but shares his unorthodox ideas. Paul is the brother of Ron Paul, the Texas congressman who helped design a 1985 federal law allowing the U.S. Mint to again issue circulating gold and silver coins.

    Wayne Paul and Kahre have exchanged materials on tax and government theory for several years. They believe circulating gold and silver coins are legal tender for use at face value, testimony shows.

    The two also think the U.S. treasury secretary, who oversees the IRS, is beholden to foreign powers because he plays a leadership role in international economic development organizations that receive some U.S. funding. That is another reason Kahre cites for not cooperating with the IRS.

    At the height of Kahre's payroll service, he had more than 30 other local companies also enrolled as customers. One owner of an outside business has been tried for related tax crimes. Several government witnesses testified in exchange for reduction or elimination of criminal charges for participating in either Kahre's payroll system or his real estate deals.

    Kahre's tax saga began in the early 1990s, when he went through bankruptcy after several partners in a now-defunct Las Vegas construction business took assets and left town, leaving Kahre with an unpaid IRS bill that led to seizure of his business equipment.

    Starting over as a sole proprietor, Kahre embarked on tax research and began filing numerous lawsuits to dispute his tax liability, against parties including the U.S. secretary of the treasury and the IRS.

    All the lawsuits were dismissed as frivolous, which the government cited to argue Kahre had plenty of notice that his ideas were wrong. The defense cited it to show his devotion to his beliefs.

    By 2002, Kahre's net worth was more than $6 million, according to a financial statement cited by prosecutors. Kahre has not filed an income tax return since the mid-1990s.

    In a 2003 raid of several Kahre business locations, authorities seized evidence for a tax investigation. In 2007, Kahre and eight others went to trial before Judge Robert Jones, with no convictions. Most of those defendants were acquitted or left out of the latest reformulated indictment.

    But the 2007 jury was unable to reach a verdict regarding the Kahre siblings and Loglia, which allowed authorities to prosecute them again. Cline is a new defendant.

    Alex Loglia has been victimized by IRS hypocrisy and error, his attorney, Joel Hansen, argued Wednesday. For the years in question, Loglia mishandled his taxes based on his sincere beliefs. In 2004, Loglia started realizing his actions ran counter to law, so he amended his returns and attempted to pay penalties and back taxes to the IRS. But the agency has repeatedly failed to credit him, Hansen says.

    The government contends Loglia not only conspired by taking coins for pay, but helped Kahre recruit new business to the payroll service. An IRS agent testifying for the government said Loglia owes $17,000 in taxes.

    Lori Kahre faces conspiracy charges because she took pay in coins and also did payroll work for her brother. She saw numerous workers take pay the same way at more than 30 participating companies, and that reinforced her mistaken belief, according to Michael Kennedy, the federal public defender representing her.

    Prosecutors can't prove criminal intent if Lori Kahre only "likely, probably, maybe" should have known her tax theory was wrong, according to Kennedy. She owes about $37,000 in back taxes, the same IRS witness testified.

    Contact reporter Joan Whitely at jwhitely@reviewjournal.com or 702-383-0268.

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    Larry wrote on August 27, 2009 10:14 AM: so, by this logic.. you buy a $50.00 gold coin in 2000 for $230.00.. seemingly the tax is owed on the market value..
    the market value climbs overnight, and by 8AM it opens 100.00 higher... by 3;00pm it drops back down...

    I wonder how you tax a face value currency that jumps all over the scale?


    Adam Rodriguez wrote on August 15, 2009 12:26 PM: My god the jury is as bad as the IRS.
    Why the hell would they give a businessman worse detention than a serial killer aside from the fact they are lunatics or perhaps paid IRS plants.


    Finn wrote on August 14, 2009 01:51 PM: Anthony,

    Good find. I'm familiar with that.

    This statement from the article infuriated me:

    "Judge David Ezra has instructed the jury that the law requires a taxpayer to go by the fair market value of such coins for tax purposes, not the much lower face value. But jurors must decide if Kahre and two others charged in the payroll conspiracy knew about that requirement and still chose to disobey it, which would form a criminal intent."

    WTF law is he referring to? Boy, I bet the men in black didn't visit him before the trial started....


    COME AND GET ME wrote on August 13, 2009 11:20 PM: Well said Marx Hater!

    Fireright is the reason this country is going down like the Titanic. It simply takes my breath away that someone can be this ignorant in this day and age. Does he not know how to use his mouse to get around the internet and do research?

    I don't expect everyone to agree with me but if you take a different position at least be able to back it up with facts.

    Greg Damm is a liar who with holds evidence from the defense. He has been sanctioned by the courts for his misconduct and the Constitutional Law Professor Jonathan Turley even wrote a lengthy article about it.

    Our justice department doesn't care about justice or right they only care about scaring the fragile public into going along quietly to the slaughter. I'm guessing Fireright will be the first on his block to pack his suit case , get himself branded with his SS number and get on the train but first he will sell out his neighbors that are trying to fight for keeping their Country free.

    Firefight gives me one good reason to hope that Obama Care will have death panels maybe he can qualify for an early exit. Wouldn't that be sweet irony the government he loves will save us from the government we are fighting against!

    GO BOBBY KAHRE. AQUIT THEM ALL!


    Fireright hater wrote on August 13, 2009 11:07 PM: Fireright,

    Show me the law that defiens what a dollar is and then we will talk about how is following the law and who is not. You cannot do it because there is no law and you serfs like to like the Jack boots of your Fascist masters.

    So stop writing and start licking.


    Marx Hater wrote on August 13, 2009 11:01 PM: The real question that these Black Robed Tyrants refuse to answer is this: What law requires any American to use Federal Reserve Notes as the basis for the calculation of "Fair Market Value"?

    Why can Fair Market Value not be calculated in ANY dollar, silver, gold, Presidential?

    Is it to be calculated in dollars?

    GREAT.

    What law defines what a dollar is? THERE IS NO SUCH LAW.

    They whole Federal Reserve System system is a fraud and Kahre exposed it so these lairs thieves and tyrants had to prosecute him. Damm, Jones, Ezra, Dawson, are traitors to all that the Founding Fathers fought and died for.

    These Black Robbed followers and practitioners of the religion of Marxism and its 2nd commandment of the Graduated income tax, refuse to clearly state that Federal Reserve Notes are dollars because they KNOW they are not dollars but only "legal tender."

    Pennies are legal tender too and they are not dollars.

    Judge David Ezra is just another "miner and sapper" (as Jefferson called the federal judges) intent upon destroying the Constitution using verbicide.

    Greg Damm continues to be a traitor and a liar and a man who would and did suborn perjury in this case.

    And if The Church of Jesus Christ of Latter-day Saints in Las Vegas had any consistent morality they would excommunicate Damm, Judge Jones and Judge Dawson for being Gadianton Robbers. But the local church will not do so because they have embraced the plans of Gadianton themselves. Interestingly that is what the Book of Mormon said would happen in these Latter-days.

    Local leaders are just like the Mormon leaders that supported Hitler in Germany.

    Read about Helmuth Heubner and how the local church leaders in Germany excommunicated him for fighting against Hitler. The local church leaders that support men like Damm, Jones and Dawson are as evil.


    Anthony wrote on August 13, 2009 07:46 PM: The Supreme Court has explained [in Thompson v. Butler, 95 US 694, 696 (1877)]:

    A coin dollar is worth no more for the purposes of tender in payment of an ordinary debt than a note dollar. The law has not made the note a standard of value any more than coin. It is true that in the market, as an article of merchandise, one is of greater value than the other; but as money, that is to say, as a medium of exchange, the law knows no difference between them.

    "As legal tender, a dollar is a dollar, regardless of the physical embodiment of the currency. The legal monetary value of Crummey's $50 American Gold Eagle coin is equivalent to that of a fifty dollar Federal Reserve note."

    WHY DOES THIS CASE NOT MATTER IN THIS CASE?? Should this not exonerate the defendants?


    a 1 and a 2 wrote on August 13, 2009 01:35 PM: The Two Step Plan to National Economic Reform and Recovery

    1. Directs the Treasury Department to issue U.S. Notes (exactly like Lincoln’s Greenbacks) to pay off the National debt.

    2. Increases the reserve ratio private banks are required to maintain from 10% to 100%, thereby terminating their ability to create money, while simultaneously absorbing the funds created to retire the national debt.

    .


    asleep wrote on August 13, 2009 01:34 PM: "The powers of financial capitalism had a far-reaching plan, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole...
    Their secret is that they have annexed from governments, monarchies, and republics the power to create the world's money..." .- Prof. Carroll Quigley,


    awake wrote on August 13, 2009 01:33 PM: "The purpose of this financial crisis is to take down the U.S. dollar as the stable datum of planetary finance and, in the midst of the resulting confusion, put in its place a Global Monetary Authority [GMA - run directly by international bankers freed of any government control] -a planetary financial control organization" - Bruce Wiseman


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