Tax resister Allnutt again faces evasion charges

July 20, 1995|By Alan J. Craver | Alan J. Craver,Sun Staff Writer

Fred W. Allnutt Sr. is back in familiar, troubled waters.

The longtime tax resister and his son were indicted Tuesday on tax evasion charges by a federal grand jury -- the second time in 12 years the Ellicott City businessman has faced such charges.

Mr. Allnutt and his son, Christopher Allnutt, were charged with conspiracy and willful evasion of paying taxes in a indictment obtained by the U.S. attorney's office in Baltimore.

Christopher Allnutt, also of Ellicott City, was charged with an additional count of aiding and abetting his father.

The Allnutts did not return telephone calls yesterday. If convicted, Fred Allnutt could be sentenced to up to 10 years in prison and his son to 15 years.

Fred Allnutt's tax troubles go back to the early 1980s, when he began challenging his responsibility to pay county, state and federal taxes, according to court documents.

Mr. Allnutt did not file a federal tax return for 1981 through at least 1993, according to federal bankruptcy court records. He was convicted of tax evasion in 1983. He said at his trial that he believed paying taxes with Federal Reserve notes was unconstitutional.

Although convicted, Mr. Allnutt was not given jail time. But the Internal Revenue Service seized his company, JFC Excavating, which has offices in Ellicott City.

IRS officials said at the time that Mr. Allnutt owed more than $6 million, which included the back taxes, interest and penalties.

Mr. Allnutt, who no longer owns JFC, was permitted to hold a management position at the company under a court-approved arrangement worked out about two years ago.

In the new case, federal prosecutors say, the IRS asked Fred Allnutt in 1987 for information to determine the amount of taxes he should have paid from 1981 to 1986. When he failed to provide the information, the IRS assessed his tax liability at more than $1.9 million, prosecutors say.

The indictment alleges that in 1988 the Allnutts initiated a scheme to prevent the IRS from identifying Fred Allnutt's assets and collecting taxes owed by him, prosecutors say.

To thwart IRS officials, the Allnutts failed to file tax returns and Fred Allnutt did not keep money in bank accounts under his name, prosecutors say.

The prosecutors assert that JFC Excavating accounts were used to support Fred Allnutt and pay his personal expenses, such as country club dues and indoor tennis fees. The accounts also were used to pay off more than $400,000 of his personal debts, prosecutors say.

The Allnutts also are accused of depositing business receipts into a separate bank account -- allegedly kept secret from other company employees -- and using the money to support Fred Allnutt and buy homes for his children, prosecutors say.

The IRS investigation revealed that Christopher Allnutt received more than $500,000 and Fred Allnutt got more than $300,000 from sales of wood products by JFC Excavating, prosecutors say.

Mr. Allnutt filed for Chapter 11 reorganization in October 1992, the day after a federal judge denied his request for an injunction that would have blocked the seizure of his company by the IRS.

At the time of his bankruptcy filing, Mr. Allnutt owed money to 55 creditors, including large amounts of unpaid taxes to Howard County, the state of Maryland and the IRS.

In April, Howard County got $800,000 from Mr. Allnutt as part of a liquidation and compensation plan approved in federal bankruptcy court. The state got $195,022 and the IRS $3 million in the plan.

The money that went for unpaid taxes and to his other creditors came from Mr. Allnutt's $4.3 million estate. It was raised from a 1993 auction of his company's building, vehicles and construction equipment.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.