Tax fraud conspirators speak out

They now see their brazen tax protest of the late 1990s as a foolish mistake that provoked the Internal Revenue Service and cost them hundreds of thousands of dollars in attorneys’ fees.

In July, both men pleaded guilty to willfully refusing to file federal income tax returns from 1996 to 2001 while part owners and employees of American Strap Inc., a leather products manufacturer based in northern Arkansas. Dingman later bought out Grady and changed the company’s name to Martin Dingman Leathergoods.

With a Jan. 22 sentencing looming, Dingman and Grady recently accepted a unique offer from the IRS to share their stories with local media outlets. The week of Nov. 12, the duo appeared on radio shows in Branson and Springfield and agreed to be interviewed by Springfield Business Journal.

“Our No. 1 objective is to educate the public that the scams and con individuals are out there preying on individuals because of their trusting nature and Christian values,” said Special Agent Bonnie MacLeod, an IRS spokeswoman.

Both men said they hope to steer people away from the nationwide network of anti-tax advocates who convinced them to join a “grassroots movement” challenging the federal government’s authority to tax personal income.

They also hope that publicly accepting responsibility for their crimes will be met with mercy in court, where they face up to two years in prison without parole and a maximum $50,000 fine. Federal prosecutors have formally asked the judge for a “downward departure” from federal sentencing guidelines in the case.

“The tax code is very complex. I still don’t fully understand it, but here’s something I do understand: The court upholds it,” Dingman said of his lesson learned. “… So I recommend – that if people have heard of these scams – that they avoid them at all costs.”

Taking the bait

Dingman and Grady first learned about the anti-tax movement through two deacons at Dingman’s church in Branson.

Both men decided to attend a seminar led by Lindsey Springer, a “charismatic” Tulsa, Okla., man who had filed a class-action lawsuit against the IRS alleging that federal income tax is unconstitutional. Springer is the founder of Bondage Breakers Ministries.

“He did a great job informing you how you were not legally required to file a personal tax return,” Dingman said. “He played on the two things that were probably the dearest to many of us: faith … and also on your love of America, your patriotism.”

Both men said the message resonated with them, and they continued to attend seminars that urged them to defy the government by refusing to file tax returns and establishing “asset-protecting” trusts.

“I actually visualized myself on that British ship in Boston Harbor throwing the tea over,” Grady recalled. “No taxation without representation. I kind of transposed the U.S. government to the British government. It was like a revolution almost, a bloodless revolution.”

Both men were referred to Eddie Kahn, a well-known tax protester in Florida who founded American Rights Litigators and Guiding Light of God Ministries. The organizations’ accountants and attorneys helped set up trusts for recruits like Dingman and Grady, who then sent letters to the IRS detailing their reasons for not filing income tax returns.

“This was going to help … bring the government to its knees and eliminate income tax,” Grady said, hearkening back to his mindset at the time. “I look back, and it was so totally out of character for me. It was something that I desperately wanted to believe that we could do.”

Then, in 2002, Springfield IRS Special Agent Susan Prine – displaying a sidearm and badge – paid both men a visit. She told them their actions weren’t legally justifiable and that they would be held accountable for their crimes.

“At that point, I knew this was not going to go away,” said Grady, now a Realtor in Branson.

The face-to-face with Prine prompted Grady and Dingman to hire attorneys, who didn’t sugarcoat the situation.

“His first comment was, ‘We’ve got to stop punching (the IRS) in the face,’” Grady said of his Kansas City lawyer. “He didn’t give me a lot of hope. He said, ‘You’re in trouble.’”

Facing the music

Grady and Dingman eventually realized that their emotions had clouded their abilities to discern fact from fiction regarding the unpopular income tax.

After extensively researching the topic on the Internet, Dingman learned that arguments espoused by Kahn and others had all been rejected by the courts. The revelation marked a turning point for Dingman, who went to high school in Norwood, east of Springfield, and graduated from Missouri State University.

“All of the frivolous arguments – all of the points this guy made over the time I listened to the seminars – had been litigated and lost probably 20 or 25 years ago,” he said. “It wasn’t new, but it was being promoted as new.”

Dingman paid $326,700 in back taxes to the IRS in 2002, but the U.S. attorney’s office still charged him with two counts of willfully failing to file income tax returns in 2000 and 2001. He only blames himself for the legal entanglements.

“I don’t feel like a victim,” Dingman said. “… Looking back, I should have sought more counsel. The reason (this happened is) we acted from emotion. And when you act from emotion, pragmatism goes out the window.”

While Kahn has been indicted for alleged tax fraud and is in a Florida jail awaiting trial, Springer and other alleged co-conspirators in the Branson area remain free, Dingman and Grady said. IRS officials would neither confirm nor deny whether those individuals are under investigation.

“We are trying to get the promoters and put them out of business,” MacLeod said.

Dingman and Grady have forgiven the perpetrators who persuaded them to participate in the bogus movement, but they said the ordeal has taken a financial and emotional toll on their families.

“The consequences for allowing yourself to take this path certainly are great financially,” Dingman said. “… That’s the small cost. The large cost is the emotional stress and strain.”

Grady said he decided to speak out for one reason: to save other families from the anguish his family has endured. He still wonders how he fell into the trap.

“I look back and think, ‘How did I get brainwashed like that?’” Grady said, suggesting that frustration with an unresponsive government definitely played a role. “The political climate right now is ripe for that. Maybe more so now than when I did it.”

Those disenchanted with government and its tax structure should try a more lawful approach to changing the system, added Dingman.

“It’s OK to disagree,” he said. “There are still some things I don’t agree with. But the point is the method that you take is critical. Write your congressman. Start a petition. Take means that are acceptable means.”[[In-content Ad]]