An IRS agent has told a federal jury that the accountant who prepared tax returns for defendant Lester V. Jones erroneously tried to claim thousands of dollars worth of business deductions.
Joan S. Rowe, the IRS agent, said she rejected many of the claimed deductions after Jones and the accountant, Ronald Dochter, told her that the claims actually were for Jones' non-deductible personal expenses, as she suspected.
Rowe, who testified Tuesday and Wednesday in U.S. District Court in Baltimore, said Jones was "extremely cooperative" in providing her with documents she needed for an audit of his 1983 and 1984 tax returns.
She said, too, that "there was no real bookkeeping system" at Jones' Bel Air law office.
Jones, a former Baltimore County prosecutor and delegate, practices criminal law and handles accident cases in a historic, 100-year-old building in Bel Air. He is on trial on federal charges of tax evasion and false filing.
During cross-examination Wednesday, defense attorney Stephen H. Sachs tried to prompt Rowe to say that Dochter was incompetent in his handling of Jones' books. But Judge Marvin J. Garbis sustained prosecution objections to such questions, saying that Sachs would have the chance to cross-examine the accountant when he is called as a prosecution witness later in the trial.
Under intense questioning, Rowe said that Dochter made several errors on Jones' tax returns, including one in which he made the same interest deduction twice.
She also said earlier that she suspected Jones could take an investment tax credit on his renovated office building, but she found no such claim on his tax returns.
Rowe testified that she traced massive discrepancies in Jones' reported income by examining bank records during the audit, and found that the lawyer had deposited a $100,000 legal fee into his personal bank account, rather than the office account that Dochter used to determine the defendant's taxable income.
But she acknowledged that Jones had purchased a certificate of deposit with the money, and had reported the interest from it as income.
She also said that Jones did not tell her he sometimes paid his associate lawyers in cash, and sometimes paid travel and other business expenses out of his own pocket rather than from his law firm's bank account.
On redirect questioning by prosecutor Ira L. Oring, Rowe testified that when Jones filed an amended 1984 tax return to correct mistakes on the original, he claimed more than $102,000 additional business deductions. She said, however, that she disallowed all but about $19,000 of the deductions.
Rowe said it took her "months" to determine who cashed certain checks that Jones received from clients, that she got "nothing" to support the defense contentions that he paid associate lawyers in cash and that the endorsement on the $100,000 check "appeared to be" Jones' handwriting.
The trial is scheduled to continue Monday.