By Bonnie King
Oregon businessman and cannabis freedom fighter tries to set the record straight on “tax fraud” arrest.
Every arrest of a lawbreaker makes a big difference to the state of Oregon- every dime collected, a huge relief to the tax payers. That’s what one would hope, that the powers-that-be had the best interests of we average citizens at heart.
That rose-colored version of life in Oregon is far off however, proven by the odd announcement recently by Attorney General John Kroger about his big catch of the day. That is, a local businessman that was late in filing two years of personal income taxes.
Filing late is not any more unique in Oregon than in other states, but it seems this particular late-filer was the straw that broke the camel’s back for Oregon’s top cop.
For the first time in Oregon history, our Attorney General made a special effort to boast about the arrest of someone who allegedly did not file personal tax forms on time.
Attorney General Kroger’s public audio announcement extolled a renowned citizen of Portland, (Douglas) Paul Stanford, saying he had been arrested on “tax fraud charges”. Kroger explained that Stanford faces charges of ‘Failure to File Personal Income Taxes’ for the years 2008 and 2009.
Just the type of thing used to take down such notorious felons as Al Capone.
Still, this begs the question: don’t citizens of the U.S. have any privacy rights? It seems not in this case. Knowing as we do that thousands of otherwise good and law-abiding citizens have outstanding tax forms and unpaid tax bills, it is curious that Attorney General John Kroger chose to make a public statement specifically about Paul Stanford.
Paul Stanford is no Al Capone. He is the founder and president of The Hemp and Cannabis Foundation (THCF) medical clinics, that has tended to tens of thousands of sick and ill patients in nine states, and has advocated the end of cannabis prohibition for thirty years.
He is also a Chief Petitioner for Initiative Number 9 (Oregon Cannabis Tax Act 2012) to reform Oregon’s cannabis laws by regulating the legal sale of cannabis and allowing unregulated production of hemp fuel, fiber and food.
Stanford believes that the criminal case and the Subpoenas are motivated by a political goal to discredit him and his organizations, attempting to stop their work to lawfully change the laws and end prohibition of cannabis.
“The Oregon Attorney General made a public statement and issued a press release the day after my arrest with the title, ‘Hemp and Cannabis Foundation President Indicted on Tax Fraud Charges,’ and linked from the Oregon Attorney General’s website with, ‘AG Kroger Announces Tax Fraud Arrest’,” Stanford said.
“Failure to file personal income tax returns is not fraudulent and does not constitute fraud. Due to circumstances beyond my control, I was unable to accurately file taxes and made arrangements with the US IRS regarding compliance which should have been sufficient for compliance with a request for an extension to file under Oregon’s laws,” Stanford stated in the motion to dismiss.
“If I had filed tax returns that were purposely inaccurate, that would be fraudulent. One would expect the Oregon Attorney General and its legal staff to know the difference between the accusation of noncompliance and the accusation of fraud, however, the Oregon Attorney General has been publicly trumpeting this false allegation of fraud, thereby tarnishing the reputation of the Defendant.”
“One of the prosecutors for the Oregon Department of Justice recently told our CPA that this case ‘would set back our work to end cannabis prohibition’,” Stanford said. “And I believe that this is an objective of the Oregon Department of Justice’s case and is one facet constituting malicious prosecution.”
“These false allegations have been covered by numerous television and radio stations and published in dozens of newspapers, including the Chicago Tribune. Never before has the Oregon Attorney General ever issued a press release regarding a taxpayer’s failure to file two tax returns, no less the two most recent returns.”
Stanford contends that the State of Oregon rushed to indict him with the full knowledge that he had been prevented from filing due to circumstances beyond his control and that the personal tax return filings would be made immediately forthcoming. Information needed for those two years had been challenging to assemble, due to the destruction of records by a past employee whom was fired for stealing. A complaint regarding the bookkeeper was filed in January (Multnomah County Case Number 11013035).
“I would like to see an investigation on how this all came about, that would be real justice,” Stanford said. In the Multnomah County Case, he states “individuals that likely are clandestine agents and/or officers directed by state and/or federal agencies are responsible for the destruction of Respondents’ financial records, and that this made Respondents’ compliance impossible.”
They were about 60 days from completion when the DOJ moved to indict. “They knew I’d been doing everything, diligently, that I could,” Stanford said. “We were close.”
In early February, Stanford says a special investigator told him, “We know you’re going to file, but we’re still going to indict.” And so they pushed on, working to finish the taxes with a time clock ticking.
“They were fully aware of the situation, and that we have been working to locate missing information, recreate financial records that had been destroyed and comply with our duty to file tax returns,” Stanford said. “This is absolutely a case of looking for a reason to arrest.”
AG Kroger’s official announcement said Stanford’s indictment and arrest followed an investigation by the Department of Justice’s Charitable Activities Section and Criminal Justice Division, whose efforts culminated as part of “Operation Frogger”.
“Operation Frogger” was described by Kroger as “an anti-drug campaign aimed at drug trafficking groups” in Oregon. It was a statewide sweep, involving at least 200 law enforcement personnel, and was dubbed a “major heroin raid” as police netted 22 suspects along with a total of 341.5 grams of heroin, 28.5 grams of methamphetamine and 22 grams of marijuana (less than one ounce).
In an unusual twist, the major heroin raid also included the capture of …someone remiss in filing personal income taxes.
“In these tough economic times every tax dollar is crucial, and we cannot afford to let people cheat on their taxes,” said Attorney General Kroger. Most people would not consider being late, “cheating”.
Paul Stanford’s name is not even included on the list of 22 “Frogger” suspects arrested. The inference that Paul Stanford is somehow involved in drug trafficking is quite off-setting to his peers, clients, and anyone who has followed the success of the THCF clinics through the years.
“If they would have asked me to come in, turn myself in, I would have. But they had to create an event,” Stanford said about the DOJ’s surprise arrival at his home. “Luckily they didn’t arrest me in front of my children.”
Once Stanford was plucked from his NE Portland home and taken 65 miles south to the Marion County Jail outside of Salem, he was booked on two counts of Failure to File Personal Income Taxes for 2008 and 2009. He then learned that the AG’s office asked that $20,000 bail be assigned to him, which would mean $2,000 to get released. But Marion County didn’t see fit to ask for any bail. He was released on his own recognizance.
Just over a week before Stanford’s arrest, his office received two Subpoenas from the Department of Justice. In response, last Friday he filed a motion in Marion County Circuit Court to “QUASH AND/OR LIMIT SUBPOENAS” on six main grounds.
First, the Subpoenas were not served upon an agent nor employee of THCF or CRRH, but upon an independent contractor and the Subpoenas are, therefore, invalid. When the Oregon Department of Justice special agent arrived and discovered that Douglas Paul Stanford was not present, the agent served the two Subpoenas upon a Certified Public Accountant contracted by THCF and CRRH to provide financial services, even after being told he was not authorized to accept service.
Second, the Subpoenas are overly broad and unduly burdensome, seeking tens of thousands of pages of documents, receipts and papers, with only two weeks given to comply.
Third, some of the documents to be produced are confidential records of medical patients’ private information and therefore should be protected from discovery. In 2007, a federal grand jury subpoena was served upon THCF and Douglas Paul Stanford for patients’ information. Ironically, the Oregon Attorney General’s office joined in that case and the Chief United States District Court Judge ordered that this subpoena be quashed because it sought privileged patient information. The same protection of patients’ rights still stands.
Fourth, assuming that the scope of the Subpoenas was manageable, and the responsive documents not privileged, the timing of the Subpoenas and the short time frame for response make compliance impossible.
Fifth, compliance with these Subpoenas would violate defendant’s rights under Article I, Section 12 of the Oregon Constitution and the Fifth Amendment to the United States Constitution against compulsory self incrimination.
Sixth, due to a lack of time and/or resources, retaining counsel to represent THCF, CRRH nor Douglas Paul Stanford, regarding this Subpoena nor the two criminal indictments mentioned in the Fifth grounds listed above has been impossible.
Stanford says he received no notification letter or phone call forewarning him of the possibility of arrest, and was surprised when it happened because he had complied with their wishes to the best of his ability while continuing communication with them.
“We have been in an ongoing audit since from the Oregon Department of Justice continuously since 2005. When I met with them recently, there was a stack of files over a foot thick on the table; two three-ring binders, all about me,” he said. “Newspaper clippings and all kinds of stuff. They probably have invested six figures in this investigation, it’s a huge waste of money.”
And for what?
“This has been planned for several months, it’s no coincidence that it coincided with Kitzhaber taking office,” Stanford remarked. In early February, when he met at the DOJ’s office in downtown Portland, he was told his case had been “languishing, but there’s a renewed interest since the beginning of the year.”
Governor Kitzhaber signed the bill to recriminalize marijuana in 1997 to prove he was tough on drugs, and then watched as a petition drive heartily overruled his decision; and more recently Stanford and other pro-cannabis advocates endorsed Bill Bradbury for Governor, so there has been a lasting adversarial stance between them.
Although the statement released by the Attorney General lends a disclaimer to the action by noting that “Every criminal defendant is considered innocent until proven guilty beyond a reasonable doubt in a court of law”, he left no question that his office is proud of this collar.
Theresa Stanford, who works with her husband Paul commented, “We both have put others first before ‘paying ourselves’ this is something the State of Oregon needs to examine, considering this is only about personal income tax. Nobody has gone to trial yet, so hold on to your seats we are in for a ride. They are going to be surprised at how self sacrificing Paul really is.”
Paul Stanford is scheduled to be arraigned on Monday, March 21st in Marion County Circuit court. He is representing himself, pro se. He will file the motion that the Court dismiss the two charges of Failure to File Tax Returns based on the fact that since his arrest he has completed filing tax returns for both years and has paid the balance past due of $4,485.00 for 2008 and $6,043.00 for 2009, in addition to $2500 for 2010.
Senior Assistant Attorneys General Shannon Kmetic and Jennifer Gardiner are prosecuting the case for the Oregon DOJ.
The Oregon Department of Justice’s mission is to fight crime and fraud, protect the environment, improve child welfare, promote a positive business climate, and defend the rights of all Oregonians. Including, one would hope, even the infamous Paul Stanford.
“I’m working for freedom, and that’s a risky thing to do,” Stanford said.
– Article originally from Salem News.