Meanwhile, John was being harassed by the IRS. It was 1999, and he'd taken the advice and become a product of the product, having decided not to pay his federally mandated tax for the third year in a row. Global's leadership initially showed some support, he says—Struckman included. "I was their little success story," he says. "The guy who didn't have anything more than an 8th-grade education, but who was doing pretty well."
John says that Struckman gave him $15,000 to help pay his legal fees. But the "we're all in this together" attitude lasted only as long as it took him to seek a second opinion, he says. He consulted his own lawyer, and was informed that he didn't have much hope of mounting a defense.
Jeff Drew
David Struckman was busted for running one of the biggest tax-avoidance enterprises in recent U.S. history. But he's not through with the IRS just yet.
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In September 2000, John was sentenced to eight months in federal prison for tax evasion. He also lost his investment, a total of $51,000, he says. After his release, John took Struckman, LaMantia, and Andersen to court, alleging that they had defrauded him by misrepresenting the validity of the antitax theories Global had sold him, and which he'd then sold to others. A federal court in Oklahoma eventually awarded him a judgment of $4.5 million after Struckman and the rest of the plaintiffs failed to respond to subpoenas.
Speaking of the suit, Struckman admits to making mistakes, but stops short of taking full responsibility for what became of his former customers. "Everyone makes their own choices," he says. "That's part of free enterprise. I understand why people would point the finger. If they get into trouble with the IRS, they say, 'Well, this is what they taught me.' But in the end, they chose to participate."
According to John, there are hundreds of people with similar stories. And yet so far he is the only Global retailer to file suit against the company founders. It could be that these folks, whom one might only loosely describe as "victims," are disinclined to speak out of embarrassment.
But there are others. If one event hastened Global's fall, it was the 1998 48 Hours segment in which a CBS hidden-camera crew infiltrated a Global conference in Cancún. The report detailed the death of Russell Anderson, a Montana man who hung himself after losing his retirement money in Global investments.
On April 5, 2001, this report was referenced frequently during a meeting of the Senate Finance Committee on the government's response to tax-avoidance scams. Four years earlier, IRS commissioner Charles O. Rossotti had been called by the committee to take questions addressing the IRS's thorny relationship with American taxpayers. Afterward, President Clinton signed into law legislation aimed toward making the agency friendlier.
This time, Rossotti was called in to address accusations that the agency had not been aggressive enough in investigating tax-avoidance-scheme promoters. Pushed for hard numbers on how many antitax organizations were in operation, Rossotti estimated "thousands." Following the hearings, the IRS Criminal Investigation division embarked on a campaign to put higher-profile tax-scam promoters behind bars.
A decade later, hard numbers on how many scams are still operating are hard to come by. The primary government agencies involved in that effort—the IRS and the Department of Justice—both declined requests for interviews.
Author McNabb says there will always be people trying to exploit other people's anger to sell crackpot tax-avoidance theories. "Part of it is that these people need a bogeyman, and taxation is a convenient one," he says. "Most people would get tired hating and distrusting all the time. For them it's fuel."
For his part, Struckman says he has no plans to get back into antitax promotion. Post-release, he plans to visit family in Idaho and Washington, and work to pay the back taxes he still owes. But even if he wanted to, he cannot ever again make money selling his theories on the U.S. tax system, he says. Struckman claims that shortly after he was indicted, federal prosecutors filed a permanent injunction barring him from publicly promoting tax evasion.
To Struckman, it's just one more example of the government treading on his constitutional rights. His lawyer, Bernhoft, writes in an e-mail that beginning with the passage of the Tax Equity and Fiscal Responsibility Act of 1982, the federal government began to issue civil injunctions against promoters of offshore tax schemes. Bernhoft calls the injunctions "patently unconstitutional," lamenting that the "system's goals and strategies always take precedence over mere constitutional rights and principles." But if the federal government ever did file such an injunction against Struckman, it doesn't appear anywhere in his legal records.
Still, Struckman remains convinced that he'll prevail against the government in his appeal, and in regard to the purported injunction. How does he know? The truth is in his now-favorite Bible passage,Isaiah 54:17, which contains a short but defiant line about how no weapon formed against the faithful shall prosper. Struckman says he's been clinging to this verse since arriving at SeaTac Federal Detention Center from Panama nearly five years ago. "My faith," he says, "is the one thing that the government hasn't been able to take away."
vcoleman@seattleweekly.com
