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‘Sovereign’ Tax Cheat Bilked Millions from Treasury; Gets 12 Years

By Bill Morlin on June 25, 2012 - 2:29 pm, Posted in Sovereign Citizens

An antigovernment “tax-cheat guru” who claims the federal government has no authority over him found out differently last week when a judge ordered him to spend 12 years behind bars and pay $6.2 million in restitution.

Ronald L. Brekke, 55, of Orange County, Calif., helped nearly 1,000 people in three countries file for a total of $763 million in bogus tax refunds from the U.S. Treasury.

IRS officials say they “flagged the vast majority” of the filings from Brekke and his clients as frivolous. Even so, some $14 million in tax refunds was paid out before the agency detected the fraud.

Brekke's false documents

About two-thirds of Brekke’s customers were Canadians who had never paid any U.S. income tax and were not owed any refunds from the U.S. Treasury, IRS criminal investigators say. Those submitting the claims were told to quickly move the refund money to Canada so it would be more difficult for the IRS to recover.

Brekke promoted his fraudulent tax scheme on the Internet and at “tax refund seminars” he held in the United States and Canada.

At his sentencing Friday in Seattle, U.S. District Judge John C. Coughenour said Brekke “fundamentally failed” to grasp and follow U.S. laws in the mistaken belief they don’t apply to him. Unless he accepts those laws, the judge told Brekke, he will “squander his remaining time on earth … tilting at windmills.”

Under Brekke’s scheme, sovereign citizens and others with assorted antigovernment agendas were told +that the federal government would issue tax refunds equal to the value of a person’s personal debt.

In a two-year period, he took in approximately $400,000 in fees from the people he assisted, court documents say. He continued despite repeated warnings and fines by the IRS for similar filings he submitted on his own behalf. Brekke also received a public notice from the FBI, warning him that his scheme was illegal.

After he was charged, Brekke filed mountains of frivolous legal documents in federal court, leading federal prosecutors to take the unusual step of seeking an obstruction-of-justice enhancement for sentencing. To back up their claim, prosecutors filed with the court a photo showing a huge pile of his bogus paperwork.

Using a common sovereign citizen technique known as “paper terrorism,” Brekke also filed a multimillion-dollar lien against an IRS employee involved in the administrative forfeiture of $291,064 seized by the government from Brekke’s PayPal account.

Little is known about Brekke’s background because – steadfastly claiming the federal government has no control over him – he refused to cooperate with a federal probation officer who wrote a presentencing background report.

Assistant U.S. Attorney Thomas Woods said in a sentencing memorandum that one thing is clear about Brekke: “He does not believe that this (federal) court has the authority to hear this case. Even though he helped individuals steal millions of dollars from the U.S. Treasury, he maintains that he cannot be held accountable for his actions.’’

“Even worse,’’ the prosecutor added, Brekke “has repeatedly claimed ‘damages’ and demanded that the government pay him money” for bringing criminal charges against him.

Brekke was convicted on March 15 of conspiracy and wire fraud following a two-day jury trial in Seattle. The defense called no witnesses.

The investigation into Brekke’s activities began after two Canadian co-conspirators were arrested in October 2009 in Bellingham, Wash., when they tried to cash two IRS refund checks exceeding $350,000 each.

Convicted of fraud, Donald Mason, of Fort Saskatchewan, Alberta, was sentenced to 33 months in prison, and John Chung of Kelowna, British Columbia, was sentenced to a year and a day. A third conspirator, Wonita Chung, also of Kelowna, was sentenced to 18 months. Brekke’s promotional materials were found in Mason’s hotel room, leading authorities to him.

Kenneth J. Hines, the IRS special agent in charge of the Pacific Northwest, said the U.S. tax system “is not a slush fund for thieves and fraudsters.”

“Those who illegally target our nation’s tax dollars for personal financial gain, along with others who assist them, could face criminal prosecution and lengthy prison sentences,” Hines said. Foreign nationals residing in other countries are not shielded from prosecution, “as a few Canadians who participated in this scheme learned the hard way.”

  • matsimela muata

    I am confused as to understand how these people think that they dont need licence to driver down city street please post this facebook eddie lodge

  • bruce book

    To the person above who said it’s just a cover for good old fashioned greed–I might agree, based on this story alone–BUT-it you saw the 60 Minutes segment on the Sov Movement and the 2 Sovs that got pulled over for a traffic ticket in FL and proceeded to murder the Trooper with an automatic rifle from their van and then wound things up with a running gun batlle where they killed and wounded others before being killed themselves–this is more than greed–and, more, it’s probably already in a town near you.

  • Erika

    Reynardine, right here –

    and having read the entire opinion, I don’t think there will be a lot of patriot scams coming – I can’t see the ACA surviving the Medicaid expansion ruling because its now completely unworkable

  • Reynardine

    Erika, where can you download that? (Not real near law library)

  • Linnea

    Erika, I’d say not long at all. Cuing the Patriot/Sovereign nutcases in three… two… one…

  • Erika

    as I take a break from slogging through all 193 pages of the health care reform decision – I have to ask. now that the individual mandate and penalty has been upheld, how soon will it be untl we start hearing about Patriot/Sovereign Heath Insurance scams to try to avoid the tax penalty?

  • KMC

    Now here’s hoping that the IRS will also go after some of those CORPORATE CHEATERS AS WELL — like the Banksters who did BILLIONS in mortgage & property title fraud & THEN GOT BAILED OUT BY THEIR CONGRESSIONAL PUPPETS FOR BILLIONS, instead of helping the Main Streeters 99%!!

  • Joseph

    Yes ma’am. Makes sense to me.

  • Sam Molloy

    I heard another theory that it’s not real money anyway, it’s only “Federal Reserve Notes”. There’s a reason for Jesus’ “render unto Caesar” quote. It’s not that Caesar is divine, it’s that it is a waste of your time on earth fighting over money, which, then and now, has no actual value.

  • Erika

    Joseph, the easiest way to understand the sovereign citizens is to understand any other scammer or conartist – they are trying to get something for nothing. Scammers will latch onto anything which they believe will give them an edge or free money.

    Quite simply, the political motive is cover for plain old fashioned greed

  • Joseph

    Sovereign Citizens are an interesting sort. We receive disputes from them on a daily basis, among my favorites: How can the bank loan money that has been loaned to them, and also money that does not exists since it is not based on the gold standard?

    Funny – that didn’t stop you from borrowing the money did it? Didn’t affect you signing the Promissory Note did it?

    I don’t get it the ideology. I read their origins. I can read English. And you should see the documents they file in the property records to cloud title. Wow.

    They’ll file a lien on your property if they can get your address.

    Funny how they use those courts and county clerks who don’t have any authority over them.

  • Aron


    The man who forwarded that quote to me is a former tutor (in the Oxfordian and Cantabridgian tradition) to myself, and a current tutor to ‘Bob.’

    If Terry, easily the smartest man I’ve ever met (by a long shot) can’t persuade Ryan that his views may be a bit silly, no one can. I honestly believe what that idiot needs is a solid smack in the side of his head. (Considering one of his tactics involves accosting passers-by at the busiest intersection of Gainesville, FL with a megaphone, I think this occurrence may be a foregone conclusion.)

    Also, I believe it goes without saying that he smokes enough marijuana to likely keep at least one of the Mexican cartels solvent for the year. Ryan’s pretty messed up.

  • Supersonic250

    Here’s hoping you can dissuade him from his insane beliefs before he or someone else gets hurt. Good luck, Aron.

  • Aron

    This is my friend Ryan Katz’s website. He goes by ‘Bob Tuskin,’ apparently. And he is now espousing sovereign rhetoric.

    Another mutual friend sent me this pearl of wisdom from ‘Bob’s’ mouth:

    ‘Only slaves to the system carry their driver’s license with them when they drive.’

    I sent him information from the SPLC regarding the Sovereign movement in response. Scary stuff.

  • Erika

    My guess is that it is more like 100% fraud

  • Dan Zabetakis

    I think there is a type of fraudster who gets psychiatrically caught up in his or her own fraud. The sovereign citizens seem to be this way, half-zealot, half-fraud.

    Of course they become the perfect evangelist for their schemes since they are perfectly sincere. Unsophisticated victims can be drawn in (i.e Mason and Chung, the two Canadians).

    The IRS will warn you off if you try any of the well-known tax frauds. But if you persist they will hammer you (as above). They have a really good web page listing the most popular frauds and the various penalties.

  • Reynardine

    Amazing, how this “sovereign” never seemed to espouse a philosophy he thought would make him poor.

  • Supersonic250

    Nicely put, Joseph… I don’t pay taxes, being completely dependent at the moment, but once I’m out on my own, I plan to pay ’em proper. It just baffles me what kinda bent head-space these people are in to think the rules don’t apply…

    …Then again, everyone likes to think that they’re special little flowers who deserve special treatment now and then… The thing is that MOST people realize that’s WRONG and ignore the little voice in their heads.

  • Joseph

    I used to work for a prominent Tax Defense Attorney in Houston when I got out of that Navy. I asked him if the IRS was legal. He told me:

    “Joseph, any agency that can put in you prison is as legal as it needs to be.”

    Very good litigator. I pay my taxes. And when I get a bill from them, I pay that too. :)