Scheme to avoid paying taxes ends in disbarment
A southern California attorney whose online anti-tax programs drew the attention
of federal officials and resulted in a permanent injunction has been disbarred. EDUARDO
MARMOLEJO RIVERA [#52737], 63, of Torrance lost his license Aug. 17,
2006, after a federal court concluded that he violated tax laws by advising
his customers not to file federal income tax returns and not to pay federal
taxes.
Since 1991, Rivera has operated an anti-government Web site that focuses on
abusive judges, government propaganda and religion, and offers an internet
law school affiliate program and links to the Sovereignty Education and Defense
Ministry, a group that appears to emphasize religious freedom and the separation
of powers.
Rivera found himself in trouble for selling tax schemes that purported to
exempt his customers from federal taxes.
He sold opinion letters — for anywhere from $100 to $2,000 — designed “for
use in avoiding criminal charges, for submission to the IRS and for persuading
bankers to resist IRS collection efforts,” according to the bar court.
He advised his customers to rely on the letters as part of a demand that their
employer stop withholding taxes.
For $100, a buyer could purchase one letter, delivered electronically, and
for $150, a single letter sent by mail. For $500, a buyer received four letters,
including research and a motion to dismiss a federal indictment, and for $1,000,
he received four letters, research, a dismissal motion and documents “to
establish business and personal non-liability.”
For $2,000, customers received a “COMPLETE PACKAGE of opinion letters,
agent letters, lien, levy, lawsuit and employer kit.”
In 2003, the federal government sued Rivera civilly for preparing and selling
abusive tax schemes. It won a permanent injunction against his activities after
the court found he was impeding the IRS’ collection efforts.
The six customers involved in the government case owed more than $9.5 million
in tax, interest and penalties. The court concluded that Rivera made numerous
false and misleading statements about internal revenue laws, including:
- only federal employees are subject to federal income taxes;
- private sector employers are not required to withhold federal taxes from
their employees;
- filing federal tax returns is voluntary;
- people cannot be convicted of tax crimes because federal district courts
do not have judicial power over residents of the 50 states;
- the IRS does not have the authority to collect taxes; and
- violation of tax laws is not a crime.
Rivera also advertised that for $3,500 a year, he would represent clients
before the IRS. He sent the IRS letters on behalf of several clients that claimed
they were entitled to a refund and challenged IRS attempts to collect taxes.
In the letters, Rivera said there is no public law that imposes income tax
or any other tax measured by income, wages or earnings.
The federal court found little doubt that Rivera’s opinion letters “are
without merit and have been universally rejected by the courts. [His] statements
are knowingly false and fraudulent and they ‘strike at the very heart
of the internal revenue laws.’”
Bar court Judge Richard A. Platel found that Rivera interfered with the enforcement
of Internal Revenue laws, advised violating the law and made misrepresentations,
committing acts of moral turpitude. He intentionally and knowingly dispensed
erroneous legal advice, Platel said, that could subject his customers to civil
and/or criminal liability. The court also found that he violated his fiduciary
obligation to disclose that his beliefs were contrary to law.
Rivera’s actions involved moral turpitude, Platel found, and he violated
the Rules of Professional Conduct by advising people to violate the law.
During Rivera’s trial before the bar court, he said he still sells his
material to customers who can do with it what they wish, although he claimed
the letters do not appear on his letterhead.
In recommending his disbarment, Platel said Rivera’s “insistence
in misinterpreting the Constitution, important laws and significant court opinions
in such a way as to fit his needs and those of his customers/clients will clearly
negatively impact not only his future customers/clients, but law, the courts
and the legal profession.”
Rivera also was disciplined twice in 1994.
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