Firm seized by IRS reopens in Chapter 11 Company owner owes back taxes

November 03, 1992|By James M. Coram | James M. Coram,Staff Writer

A Howard County excavating company seized by the Internal Revenue Service Oct. 5 to satisfy a $6 million tax lien has resumed operations under Chapter 11 of the federal bankruptcy code.

Baltimore attorney Mark J. Friedman was appointed trustee of JFC Excavating Oct. 27 after the owner, Fred Waters Allnutt, filed for protection under federal bankruptcy laws.

Mr. Allnutt and other company managers continue to run the company on a daily basis but "report to me under my supervision," Mr. Friedman said. "I am trying to determine how we can develop a plan of reorganization to address the claims which exist" against it.

The principal claims are the $6,027,198.79 the IRS says Mr. Allnutt owes on his personal income tax return for the years 1981 through 1986. Mr. Friedman said he does not know if there are other claims against Mr. Allnutt.

Mr. Allnutt was convicted in 1983 of refusing to file a state tax return or pay property taxes. Payment with Federal Reserve notes violated the U.S. Constitution, Mr. Allnutt said at the time.

Mr. Allnutt is now waging a pamphleteering war with the IRS over the seizure of trucks, earth moving equipment and the Fred W. Allnutt building on U.S. 40 in Ellicott City.

"The IRS seizure is over" proclaims a headline repeated nine times in increasingly larger type sizes on a one-page flier Mr. Allnutt is distributing.

"Twenty-two days and eight hours after the attack began, the IRS has vacated the property and released the equipment it seized," the flier says. "The IRS used misrepresentations, trickery, false legal arguments and outright lies to delay release of the property in an obvious, yet futile attempt to destroy JFC Excavating.

"With your continued help and support we cannot fail. Together we will see justice prevail and make America a safer place for ourselves, our children and our posterity."

Although Mr. Allnutt's flier invites people to call him, he refused to return repeated phone calls.

Mr. Allnutt is also circulating a pamphlet under his byline called, "Truth Must Prevail Over IRS Lies and Tyranny." The pamphlet alleges that the IRS conducted a Gestapo-type raid on his property.

"Skulking through the early dawn, approximately sixty armed men, with bulletproof vests and guns drawn, entered, seized, and occupied the office, shop and premises of JFC Excavating and raided two job sites to seize equipment . . . intimidating and threatening the lives of innocent people," Mr. Allnutt says in the pamphlet.

Domenic J. LaPonzina, an IRS spokesman, denied Mr. Allnutt's charges. Less than half the people conducting the seizure were armed, he said, and those who were armed did not have their guns drawn. "At no time was anyone forcibly or verbally threatened," Mr. LaPonzina said.

Wendell Webb, an employee working at a gas station next door '' to the Allnutt building at the time of the Oct. 5 raid, confirms Mr. LaPonzina's account. "They had weapons, but nothing drawn," he said.

The problem for the gas station, he said, is that IRS agents used it as a parking lot. Their presence blocked and scared off customers, he said.

Owner Kim Reiter said she was accosted in the supermarket by someone who thought it was she, not Mr. Allnutt, who was being targeted by the IRS.

"IRS agents were in the [gas station repair] bays and in the [gas station] office drinking coffee," Ms. Reiter said. She estimates the station lost about $4,000 in business because of the raid next door.

Mr. Friedman says his work up to this point has been to get the company going again.

"It is important to calm people down," he said. "Employees, customers and contractors should feel comfortable that we are operating under the protection of Chapter 11 -- something that is all too frequent these days."

He said what distinguishes this bankruptcy from others is that there is no inherent problem with the business. He said both the IRS and Mr. Allnutt are cooperating with the restructuring.

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