Allegations of Embezzlement, Money Laundering and Tax Fraud Haunt the New Chairman of the National Alliance
After spending months documenting evidence of embezzlement, money laundering and more than two million dollars in unreported taxable income, the accountant hired by the neo-Nazi National Alliance(NA) called police earlier this month after being threatened at gunpoint by one of the headquarters staff.
The accountant fled the NA compound in Mill Point, W.V., and ran almost a mile to a nearby residence, where he called 911. He was eventually escorted back to the Alliance compound by West Virginia state troopers to recover his belongings.
Randolph Dilloway, 49, an accountant with almost a decade of experience, was secretly hired by Alliance Chairman Will Williams in December to conduct a forensic audit of the organization's bank statements, member dues documents and federal income tax filings. The May 3 altercation has left him shaken and concerned for his safety. Dilloway has since been interviewed by the FBI's Joint Terrorism Task Force and he is now seeking federal protection under IRS Whistleblower statutes. Terrified of his former employer, Dilloway contacted the Southern Poverty Law Center (SPLC) on May 6.
Active in the neo-Nazi, white supremacist scene for more than a decade, Dilloway moved to the NA headquarters (NAHQ) compound last winter and was given full, unsupervised access to offices holding dozens of boxes of poorly-filed financial documents and data disks associated with the group’s various business entities going back to 1985.
For five months, Dilloway organized, examined, and in many cases copied key documents and data files among tens of thousands of pages of sales receipts, donation records and ledgers. Dilloway claims that within the first 10 weeks he reported his audit findings to Will Williams and Alliance attorney, Timothy E. Kalamaros, and warned them the NA's financial records showed a "prosecutable pattern of embezzlement and income tax fraud going back at least 15 years."
Among the thousands of pages of documents, database files, transaction records and digital media provided by Dilloway to the SPLC, the disturbing email exchanges he had with Kalamaros and Williams outlining possible financial improprieties earlier this year seem to suggest the Alliance attorney was advising them to ignore evidence of tax fraud and embezzlement to avoid being audited by the IRS.
In one email, dated Feb. 12, 2015 and titled "LEGAL & CONFIDENTIAL," Kalamaros began by stating "You are right the NA may come under audit at any time." By then, Dilloway had identified several allegedly falsified or fraudulent income tax returns filed with the IRS by former NA business manager Patrick Martin and others. Kalamaros replied, in perfect legalese, that it was really not their problem and they shouldn't make it their problem.
"Mismanagement does not mean that we can’t report the deductions as they are because we disagree with management in retrospect," Kalamaros wrote. "I would hesitate to call anything false or a lie unless the proof is certain and keep in mind if you have serious proof that something is false then it may trigger a duty to revise or amend past returns... I think you have that issue in focus, I am sure, but just because Martin did a horrible job doesn’t mean that we can’t use the deductions and losses, to the maximum extent the law permits." This advice from the NA's lawyer caused Dilloway great concern. Hundreds of thousands of dollars were missing or misappropriated. In the four and a half month period between July and November 2010, for example, the Alliance deposited more than $203,000 into a business checking account, proceeds from the sale of timber on the property. Once deposited, the money was moved to various accounts but less than $20,000 was used to replenish inventory or pay expenses. The rest "seems to have disappeared," reported Dilloway.
By March of this year, the accountant claims he uncovered evidence of tax fraud, millions in unreported taxable income and several off-shore bank wire transfers that suggested a pattern of money laundering. "Obviously, when you transfer large amounts of cash offshore and don't report it as income, the government generally considers that money laundering," said Dilloway, who tried to explain the problem to Williams and Kalamaros.
His findings were "basically ignored," he told the SPLC.
Offshore wire transfers appear to also have been used to pay foreign nationals allegedly working illegally in the United States. Dilloway found tens of thousands of dollars had been wired to the First National Bank of South Africa in monthly installments between 2005 and 2007. Examination of the actual wire transfer documents show the account holder was Arthur B. Kemp, a South African national. With no 1099s or other employee withholding documents on file, Dilloway suspects Kemp was paid "under the table" as a "ghost employee" in a similar fashion to how construction companies pay foreign nationals who are working in the United States illegally.
Kemp, 52, has long-denied an affiliation or any employment arrangement with the National Alliance. In the same file with the bank wire transfer records, there is a series of April 2005 email exchanges between former NA Chairman, Shaun Walker, and Kemp discussing how to get Kemp a work visa in the United States.
Rebuilding the Reich
As Dilloway sifted through piles of bank statements, donor and membership records, Williams was also expecting him to collect the names of potential new National Alliance recruits. He gradually compiled and copied dues statements and donation records on approximately 8,000 former NA members thought suitable for a recruitment letter. Svetlana Williams, the chairman's wife and NA business manager, further gleaned the various lists and database files down to 2,500 names, which were mailed a solicitation in early spring asking former members to rejoin the NA. But there were problems. More than 20 percent of the letters were returned by the postal service as having wrong addresses.
In an April 16 email to Dilloway from Svetlana Williams, she complained about the problems she was having attempting to locate these former members. She wrote: "Will and I have been very-very busy trying to reach thousands of previous NA members besides preparing monthly BULLETINS. Out of 8500 DB I filtered 2500, we mailed 1st Bulletin to them and got at least 500 of them returned to us. Now I have been checking every one of over 500 on White Pages and other websites and resending. It will take many more days."
Through aggressive mail order solicitations and reassurances by Williams that he intended to restore the NA to its founder William Pierce's original concept, by early May, Williams had managed to rebuild the National Alliance roster to almost 100 dues-paying members, with some of the most generous donors among them. Dilloway provided the SPLC with details of these membership renewals, identified major donors and assisted in building a new organizational chart for the Alliance.
Four Women and Kevin Strom
Along with some success in attracting the return of big donors, Williams has begun to build out the necessary infrastructure to run a membership organization. Contrary to perceptions of neo-Nazi groups being predominately male-run, an examination of the new NA hierarchy shows Williams seems to have formed his organization by putting mostly educated, professional women in positions of authority.
Business Manager Svetlana M. Williams: The chairman's wife, who has a degree in accounting, seems to run the day-to-day business of the new National Alliance. Her email address, email@example.com, summarizes her position. "Lana," as she is known to members, handles dues payments and private member correspondence for the Alliance and seems to do most of the banking.
Corporate Treasurer Jayne "Jan" Cartwright: The National Alliance corporation is represented by long-time NA member Jan Cartwright who serves as the LLC treasurer and appears to maintain some level of continuity with the old NA regime when it was run by Erich Gliebe.
NAHQ Staff Supervisor Garland DeCourcy: Another long-time National Alliance member, DeCourcy, 50, appears to be directing staff activities and work projects on the National Alliance compound. A scrappy, chain-smoking former NA state organizer who carries a pistol in her purse, DeCourcy wrote on a survivalist blog in 2013 that citizens should kill police officers if they raid the home of an innocent family. "The thing is, if a cop is scared then BACK THE F--- OFF!" she wrote. An avid "back to the land" advocate, DeCourcy's Google Plus page says her interests include raising rabbits, chickens, children and "wacky homesteading." She seems to have been brought on staff to oversee reconstruction of the NA's long-neglected, crumbling infrastructure as well as to direct a self-sufficiency strategy for NAHQ. According to Dilloway, DeCourcy is putting in vegetable gardens and supervising the construction of livestock housing on the site, suggesting Williams intends on having a number of people living permanently on the Alliance property in the coming months.
Williams rented the downstairs apartment in Robert DeMarais' residence, near the compound, for DeCourcy to live in after she became ill in the mold-infested main building. Dilloway described DeMarais, the NA's former business manager, as "two-faced" and suspected he was reporting his daily activities to Williams.
Correspondence Secretary Meredith Kellar (AKA Vanessa Neubauer): Visitors who send an email to the National Alliance main site, natall.com, are automatically directed to correspondence secretary Meredith Kellar, who screens and manages all inquiries to the site. She lives with NA Media Director Kevin Strom, who pleaded guilty to possession of child porn in 2008.
Kellar also handles replies to Williams' email, firstname.lastname@example.org. In her mid-twenties and a recent college graduate, Kellar evidently began corresponding with Williams in mid-2012 while still a biology student at Millersville University, according to a series of email exchanges between the two provided by Dilloway. She soon started transcribing old National Alliance bulletins and racist tracts for inclusion on the Pierce legacy site as well as on National Vanguard.
Introducing Kevin Strom to Meredith Kellar is perhaps the most striking example of Will Williams' odd amorality and notoriously poor judgment since seizing control of the National Alliance.
Encouraging an evidently naive young woman in her twenties to have an intimate relationship with a chronically unemployed, married, registered sex offender who will turn 60 next year is inexplicably reprehensible. Despite the malevolent implications, Williams openly bragged about the introduction in a December 2013 post on The Phora, where he wrote: "I talked to Kevin earlier today and to his girlfriend that I introduced him to. She's a lot younger than he, so, yes, he is attracted to younger females. Good for him. So am I."
According to her LinkedIn page, Kellar left her job as an analytical chemist technician in January and is now living with Strom in relative poverty. Though the two are said to be engaged, Strom reportedly used a fake name when he was introduced to Kellar's family, who were completely unaware of who he was until the SPLC contacted them this week.
DeCourcy, the longtime confidant of NA founder William Pierce, claimed he was well aware of Strom's "appetites" for underage girls more than 30 years ago. She told Dilloway that Strom's new girlfriend dresses up in school girl outfits for him. As a mother of two young girls, DeCourcy said she does not want Strom moving to NAHQ and told Dilloway she hopes his sex offender status and probation terms prevent him from ever doing so. Despite DeCourcy's blunt assessment, Williams is building Strom a recording studio and an apartment on the second floor of the main office building for he and his girlfriend to live in.
Media Director Kevin Alfred Strom: Equally inexplicable to many in the racist movement is Williams' attempts at rehabilitating Kevin Strom, 58, as the primary propagandist for his new National Alliance.
Analysts suggest a possible explanation for hauling the unbearable baggage of a registered sex offender back into the fold may be Williams' historical ineptitude at messaging. Attempting to lay claim to the Pierce legacy, Williams lacks the intellectual credentials to attract new members through recruitment propaganda and his caustic, confrontational personality does little to advance his absolutist brand of "biological racism."
For decades, he hasn't even tried. Williams, 68, has produced no manifesto, no books, no tracts, not even so much as a rousing speech that anyone can remember. The self-appointed Alliance chairman's only claim to propaganda fame is his illustration of a pulp comic book for the NA more than 30 years ago.
On the other hand, despite Strom's criminal sexual appetites for what he admits are "shockingly young females," he has built a reputation as a master propagandist for the racist movement for most of his adult life. Indeed, Strom has served as a clever and convincing tailor crafting the "Emperor's New Clothes" for many an inept or corrupt neo-Nazi over the years. Along with propping up William Pierce, Strom edited and wrote most of David Duke's autobiography, My Awakening, and was paid several thousand dollars by Duke to do so, according to court papers from his first divorce. For years, Strom built up former NA Chairman Erich Gliebe's credibility with a series of flattering interviews and Web postings and he worked a similar spin cycle on behalf of Gliebe's bumbling successor, Shaun Walker, who gave the chairmanship back to Gliebe in 2006 after he was indicted on federal civil rights charges for allegedly leading a series of organized attacks on Mexicans and Native Americans in Salt Lake City bars in 2002 and 2003.
Today, however, Strom faces his most difficult propaganda challenge. He must convince the racist movement that his 2008 guilty plea on child pornography charges was all a "set up" and a sham by the government. Oddly enough, he seems to be up for the task. With a sophisticated propaganda machine blaring in to the neo-Nazi echo chamber 24 hours a day, Strom as "the victim" now has a number of supporters on most of the online racist forums.
Among the most cunning and sophisticated messaging strategies Strom has ever employed is his creation of a fake "mainstream" newspaper questioning his conviction. By all appearances, The Charlottesville Times looks like a small-town paper, complete with weather reports, news articles, and editorials. On the front page, an article defending Kevin Strom is listed among the "most popular."
Various racists, including Frazier Glenn Miller and Will Williams, have directed fellow neo-Nazi's to this very positive article lamenting Strom's "persecution" in a "mainstream news" article as proof of his innocence. Indeed, there are 68 unique references to a Charlottesville Times editorial in defense of Strom on Vanguard News Network forum alone.
Perhaps not coincidentally, the previously unheard-of "newspaper" first emerged shortly after Strom was released from prison. And an IP-address whois search of the origins of the website shows it shares the same anonymous proxy hosting service as a number of Strom's other sites. Specifically, the Natall.com whois, the whitebiocentrism.com whois, the NationalVanguard.org whois, the KevinAlfredStrom.com whois, Strom's amateur radio site, 3950.net whois, and Strom's private site, flawlesslogic.com whois show they all share the same anonymous proxy hosting service as the Charlottesville Times.
If there was any further doubt of Strom's direct hand in this fake, so-called "mainstream newspaper," further tracking reveals that five Strom-created websites share the exact same IP address as "The Charlottesville Times."
Despite the almost amateurish transparency, Strom's ruse seems to have been effective. The federal case against him for child porn, to which he pleaded guilty, is now sufficiently in doubt by many in the mostly single, unsophisticated, lonely male racist subculture that his reintroduction into the new NA seems to be generally accepted in the white supremacist movement.
And Strom is once again being paid by Williams and a number of new NA donors, including a $500 monthly stipend from John McLaughlin, a wealthy Illinois farmer and one of the most generous of the new donors in Williams' National Alliance, according to Dilloway.
Dilloway identified a number of old Alliance members who have made substantial donations to Will Williams in the past few months. Among them:
John McLaughlin: A Monticello, Ill., farmer and long-time benefactor of the National Alliance, McLaughlin, 74, has donated tens of thousands of dollars to various racist causes over the years. He also serves as vice president on the NA's corporate board. In March of last year, he assisted Williams and Dilloway in removing several truckloads of books and files from the Alliance property in advance of a pending court order prohibiting the sale of NA assets. A video posted on YouTube shows Williams and McLaughlin examining the emptied NA library. In 1996, McLaughlin published a hardbound edition of Nazi Party founder George Lincoln Rockwell's White Power.
Walter Hampton: A major Alliance donor for more than 20 years, Hampton, 70, from Columbia, S.C., has donated several thousand dollars to Williams since he announced the NA's reformation.
James K. Zimmerman: A retired pharmacist now living in Arizona, according to records provided by Dilloway, Zimmerman, 83, has been one of the most reliable and generous donors in the history of the National Alliance and is now sending money to Williams. Zimmerman told the SPLC this week he was now done with the Alliance.
Chris Larsen: A custom cabinetmaker in Bellafontaine, Ohio, with a 15 year history in the NA, Larsen's business website includes a National Alliance rune symbol as its logo. According to Dilloway, Larsen, 60, is one of Williams’ biggest donors, recently pledging $2,000 to purchase and install a sophisticated phone system at NAHQ.
James L. Mathias: According to Dilloway, Mathias, 50, of Davenport, Iowa, has been purchasing bulk quantities of racist books from Williams, including copies of Serpent's Walk, which Dilloway packed for shipment to Mathias in April. He has been a National Alliance member since 2000.
Timothy Edward Kalamaros: The primary lawyer representing Williams and the NA’s interests is long-time National Alliance supporter, Timothy Kalamaros of Mishawaka, Ind. He refused to comment on the record for this report.
Transaction records show Kalamaros spent more than $500 in 2002 and 2003 ordering neo-Nazi books and material from the National Alliance under customer number D5676. He continued making purchases from Resistance Records under customer number 8185, according to records provided by Dilloway, who also provided numerous email exchanges with Kalamaros.
"Discreetly Cherry Picking" Stormfront Members
Will Williams' ambition to take over the National Alliance goes back several years. He and Kalamoros were evidently involved in negotiations to purchase the Alliance from Erich Gliebe or take him to court in 2007.
According to a December 2007 post on VNN, Williams met with Arthur Kemp to discuss the issue. Williams ultimately blamed longtime National Alliance lawyer Glen Allen for siding with Gliebe at the time.
The ambition to become chairman stayed with Williams. He actually began recruiting what he calls "the remnant" of Pierce loyalists for most of this period. In a 2012 email exchange with Dilloway, WIlliams discussed holding an event at his home in Tennessee at the same time as former Klansman Don Black's Stormfront "summit."
Williams wrote: "I would like to have a small gathering here at my place around Labor Day of an invitation-only core group. We can piggyback on Don Black's Labor Day weekend SF seminar (two-hour drive away) which will draw some good people we can discreetly cherry pick and give us cover for a Saturday night sleepover/Sunday brainstorming session."
Williams' quiet recruiting approaches continued at Stormfront gatherings. At the 2014 Stormfront summit event Williams met a physicist, Dr. Michael Storm, whom he convinced to move to NAHQ for little or no pay and help build what Williams has called the new "White Zion" on the mountain. According to Dilloway, Williams has also recruited a Stormfront supporter from East Tennessee and another from Florida to come to the compound to work.
Dilloway also reports Williams has recruited a 20-year-old Canadian college student working on a law enforcement degree to come work on the property in the coming weeks. Going by "William Gayle Simpson" on Williams' White Biocentrism forum, the young Alliance member said he sent $120 to the National Alliance to pay his dues a year in advance. Dilloway exchanged private messages with the student on the forum and he indicated he first intended to come to Williams' residence in East Tennessee to do some work there. Dilloway claims Alliance recruits are often "used as free labor to do home improvements on Williams property."
“NDAs” and “Accounting Tricks”
During his five months on the NA property, Dilloway became increasingly alarmed at the potential consequences for the Alliance should they come under scrutiny by the IRS. But no one would listen to him, he said. Dilloway had also signed a non-disclosure agreement, or NDA, written by Kalamaros, which prohibited him from discussing his findings outside of the Alliance. As a result, he was unable to consult with other accountants or tax preparers he knew in the industry who might have been of some help.
Regardless, Dilloway knew the NDA did not apply when it came to specific knowledge of fraud or criminality. A college-educated accountant with several years experience employed as a financial analyst, including working for city government agencies examining IRS data tapes in support of their tax compliance efforts, Dilloway realized he had a problem. And by late February, he began documenting and saving his findings on digital thumb drives.
The problems were systemic. Dilloway found the National Alliance had been collecting hundreds of thousands of dollars in "member dues" but had not been reporting any of it as taxable income since at least 1998, when the dues money collected was listed as "retained earnings" on the tax filings. At that time, the Alliance claimed $860,000 in member dues income as non-taxable retained earnings.
After examining the books, the accountant estimated the Alliance collected an additional one and a half to two million dollars in member dues and donations over the 17 years since 1998 using the same illegal accounting trick. Dilloway also found that the National Alliance, a Virginia corporation, had not even filed income taxes in more than a decade, nor had several of its businesses for some of those years. He provided the SPLC with an email exchange with Will Williams claiming the NA was thought to be a non-profit and therefore not required to file. The National Alliance and the Cosmotheist Church were denied tax exempt status more than 30 years ago.
Dilloway also documented what appears to be the embezzlement of hundreds of thousands of dollars, again not reported as income, and he may have stumbled on evidence of money laundering. He found off-shore bank wire transfers, including one transfer in 2005 moving $125,000 to someone in Europe from the NA's so-called retained earnings account with Charles Schwab. Another $100,000 wire transfer from the Schwab account was described in the books as a "short term loan."
Dilloway claims Williams repeatedly ignored his warnings and eventually got angry whenever he mentioned the problems with the books.
By late winter of this year, Dilloway had uncovered what he claims were tens of thousands of dollars of embezzlement from the National Alliance, allegedly by the former business manager Patrick Martin. When he suggested Martin be prosecuted for this, Kalamaros advised him to let it go. In an email exchange dated Feb. 12, Kalamaros wrote: "When it comes to prosecution it is DOA because making criminal complaint will invite law enforcement inquiry into sensitive organizational matters that will be counterproductive to goals."
Kalamaros cautioned about even using the word "embezzlement." He continued in the same email: "Specifically, when you talk about excess deductions as embezzlement, I want to make sure that current administration is not a party to any false returns. Otherwise, we don’t KNOW for certain in the metaphysical sense what went on in Martin’s mind, so I do not think we need to call it embezzlement." Working in reverse chronological order, Dilloway examined bank statements, donation and dues payment records and tax filings and discovered the Alliance didn't even bother to file income taxes for several years for a number of its corporate entities.
But some of the worst mistakes occurred when they did.
On Oct. 23, 2014, the day before Will Williams took over the organization, the Alliance filed its 2013 tax return for National Vanguard Books (NVB). As soon as Dilloway examined the return he knew there was a problem.
The Alliance claimed it sold less than $25,000 in books in 2013 and claimed expenses of more than $60,000, thus reporting it took a loss of more than $37,000.
Worse was the last page of the filing, where the preparer claimed that National Vanguard Books had a Net Operating Loss (NOL) of more than $480,000 available in 2013.
When Dilloway researched the name of the tax preparer, Thomas Padgett of Akron, Ohio, he found that Padgett's LinkedIn page made no mention of his tax skills. It did identify Padgett as a "personal trainer," a "psychic reader," and a former employee of the Psychic Friends Network. Further research showed Padgett was a life-long neo-Nazi and notorious swindler who was convicted of insurance fraud and sent to prison thirty years ago.
Though Dilloway is no psychic, the accountant said he knew what was probably going to happen next and he was right. A few weeks ago, the IRS rejected Padgett's NVB tax filing and opened up an inquiry in to the National Alliance. The National Alliance leaders and employees and others interviewed, both on and off the record, for this report all denied any knowledge of financial irregularities with the organization and placed the blame squarely on others for any problems that may ultimately be found in the pending IRS inquiry.
For his part, Will Williams told the SPLC in an email, "I will stipulate that there were what might be called improprieties with Alliance finances under Mr. Gliebe's governance, but he is no longer Chairman of the Alliance."
Williams went on to state, "I've been managing the Alliance as Chairman for more than six months now and can say with confidence there are no current improprieties with our finances, other than our having to deal with one individual, an extremely unstable employee who stole proprietary financial records when he was fired recently."
Why "Chairman Williams" gave the keys to the compound and unsupervised access to the most closely-guarded secrets of the National Alliance for more than five months to someone he now describes as "extremely unstable," was left unanswered.
Research suggests Randolph Dilloway's reputation in the white racist subculture has always been conflicted. Nearly deaf since childhood, the quirky accountant has been exploited for his skills by at least a half dozen hate groups since 2004. Williams himself acknowledged this in a July 2012 email exchange with Dilloway when the two were discussing building an organization Williams called at the time The Creativity Alliance. Williams wrote, perhaps prophetically, "Frankly, Randolph, I can't attract the core I have in mind if you are the one in charge."
Regardless of who did what with the corporation called the National Alliance, it is the corporation that will be held liable for any fines, levies or back taxes owed. And with only the Alliance's crumbling compound and a quickly shrinking inventory of racist books available for seizure by the federal government, Williams' hopes for the creation of a new "White Zion" in Mill Point, W.V., may ultimately have been dashed by a handful of thumb drives in the possession of his now-estranged accountant.
The fact these developments have occurred based on decisions made on Will Williams' watch may not ultimately be viewed as all that surprising. With a cunning, convicted sex offender in charge of his propaganda and a psychic, convicted swindler doing NA taxes, the idea that he hired an "extremely unstable" accountant to do his books seems to fit right in with Williams' embarrassing efforts so far at maintaining the "legacy of William Luther Pierce."