Unreported income focus of testimony Ex-Balto. Co. delegate on trial in tax evasion.

July 03, 1991|By Kelly Gilbert | Kelly Gilbert,Evening Sun Staff

An Internal Revenue Service agent has told a federal jury that Bel Air attorney Lester V. Jones failed to report nearly $300,000 in income on his 1983 and 1984 tax returns.

Joan Rowe, the IRS revenue agent, said she discovered the reporting discrepancies when she audited Jones' financial records in 1986.

She said she also discovered that 57 deposit slips were missing from records Jones' accountant used to prepare the prominent lawyer's income tax returns.

Rowe testified for the prosecution yesterday in U.S. District Court in Baltimore, where Jones, a former Baltimore County delegate and prosecutor, is on trial on income tax evasion and false declaration charges.

Jones is accused of failing to report $284,890 in taxable income on his 1983 and 1984 returns, and of filing false amended returns in an alleged coverup attempt.

Answering questions from prosecutor Ira L. Oring, Rowe said Jones told her during the April 1986 audit that some of the unreported money she discovered in his various bank accounts was, indeed, income.

But she said that, when she asked Jones, his accountant and his secretary to justify the massive discrepancies in his tax records, "I received no explanation."

Rowe said she found evidence that Jones had deposited large sums in his personal bank accounts in Perry Hall and in Palm Beach, Fla., that should have been funneled through his law office operating account so it would be reported as income at tax time.

The agent said deposit slips from the operating account were used to figure Jones' taxable income at the end of each year. But his returns showed far less reported income than he actually earned, she said, because numerous deposit slips were missing.

She testified that she found the discrepancies by comparing bank statements from several accounts with stacks of deposit slips for his law firm's operating account.

Rowe said Jones' original tax returns showed gross receipts from his law practice of about $184,000 for 1983 and $171,000 for 1984.

When she returned to Jones' office to finish the audit in June 1986, the agent said, she was given copies of amended returns that showed gross receipts of $297,000 for 1983 and $422,000 for 1984.

Rose said she told Jones that she could not officially file the amended returns because he was under investigation.

Her audit began as a look at Jones' 1984 return, she said, but it was expanded to include his 1983 return as well after she became suspicious that he had not reported, as income, a $100,000 legal fee he got in an auto accident case in late 1983.

On cross-examination by defense attorney Stephen H. Sachs, Rowe acknowledged that Jones cooperated fully with her during the audit, except for questions that he didn't answer about discrepancies in his records.

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