A Washington accountant with ties to the antigovernment “sovereign citizens” movement has pleaded guilty to preparing false income tax returns that cheated the U.S. government out of an estimated $2.5 million.
Federal prosecutors will recommend that Timothy George Garrison, 59, of Mount Vernon, Wash., spend four years in prison when he is sentenced on Feb. 2 in U.S. district court in Seattle. He pleaded guilty last week to two counts of assisting in the filing of false federal tax returns.
As part of the plea bargain, a federal firearms charge will be dismissed against Garrison. He couldn’t legally possess firearms because he was convicted of mail fraud in 1984.
Garrison, who holds an accounting degree from the University of Washington, was part of an antigovernment group variously called the “Sovereign Assemblies” or “Assemblies of the Counties at Large.” He served as treasurer of the “assemblies” last December, the SeattlePI.com reported on Monday.
Garrison, his wife and two other members of the Washington state “assemblies” were “jurors” on a pseudo-legal common law court that found Alaska Peacemakers Militia leader Francis Schaeffer Cox “not guilty” after his arrest earlier this year on charges related to a plot to kidnap and kill state troopers and a judge in Alaska.
Sovereign citizens generally believe that they aren’t subject to federal or state laws and that they can issue their own license plates and driver’s licenses. The FBI this fall identified the sovereign citizens movement as a potential source of domestic terrorism.
Some members of the Washington group even deputized themselves as “county rangers,” apparently believing they had arrest powers. When federal agents searched Garrison’s home in June, they found a 9 mm Glock pistol, a “county ranger” badge, fraudulent license plates and other documents related to the sovereign citizens movement.
According to an 11-page plea agreement signed by Garrison, he has operated a tax preparation business, the 89th Street Management Company, since 1988 from his home in Mount Vernon. He prepared 200 to 400 tax returns annually.
Between 2004 and 2009, the court document says, 17 of Garrison’s approximately 200 to 300 clients were audited by the IRS “and determined to owe average back taxes in excess of $20,000 per return.”
Garrison’s scheme involved the filing of two sets of tax returns for his clients – a corporate tax return and a personal tax return. The accountant advised his clients to create corporations through which all income was funneled. Some of those individuals apparently were unaware their accountant had filed fraudulent returns on their behalf, according to court documents.
“The individual’s tax return was fraudulent because it declared only, typically, $1,000 per month of income from the corporation when, in fact, the individuals were typically paid much more,” the plea agreement says.
“The corporation tax return was fraudulent because it declared false expenses,” it added. “The net result of the individual and corporate tax returns was to facilitate the avoidance of taxes on the individual tax returns.”
Garrison’s scheme resulted in a tax loss of between $2.4 and $2.5 million, the plea agreement says.