Freedom Lawyers of America

SCHIFF FIGHTS I.R.S. RESTRICTIONS
Can a man be held in contempt of court and jailed for selling copies of
public records?
LINK: http://www.nytimes.com/2003/08/16/national/16TAX.html

Tax Protester Faces Justice Dept.
By DAVID CAY JOHNSTON
LAS VEGAS, Aug. 15 - Can a man be held in contempt of court and jailed for
selling copies of public records?

Irwin Schiff, the nation's best-known proponent of the idea that people are
not required to pay income taxes, has put that provocative question to
Lloyd D. George, a federal district judge who held a hearing here on
Thursday on a Justice Department request that Mr. Schiff be put behind bars
for civil contempt.

On June 16, Judge George issued an injunction ordering the 75-year-old Mr.
Schiff, who has twice gone to prison for tax offenses, to stop promoting
his "zero tax return," which he says allows anyone to legally list no
income and so pay no taxes. At least 5,100 such returns have been filed in
recent years, the Internal Revenue Service says, costing the government $51
million in taxes and tying up law enforcement resources needed to pursue
the filers.

Judge George also ordered Mr. Schiff to stop selling his $38 book, "The
Federal Mafia: How the Federal Government Illegally Imposes and Unlawfully
Collects Federal Income Taxes." Judge George found the book to be false
commercial speech that incites people to evade taxes, although, contrary to
Mr. Schiff's assertion that the book had now been banned, the court did not
prohibit its sale by people unconnected to him.

Five days later Mr. Schiff certified to the court that he was obeying the
injunction, which also required him to post it prominently on his Web site.

But the Justice Department says he has flouted the order, noting that he
continues to assert on that site that zero income tax returns are legal. In
addition, he provides only a link there to the injunction.

Among the Justice Department's other evidence is a $150 "Commemorative
Injunction Packet," which went on sale at his Web site after the order was
issued.

The packet includes a copy of Mr. Schiff's 2002 tax return, showing zero
income, and his statement to the I.R.S. explaining his theory that no
individual has income under federal law, which, he says, defines income as
corporate profit.

The packet consists of the chief documents from the case before Judge
George. For those not inclined to wade through Mr. Schiff's book, with its
miasma of theorizing and digressions, it offers a crisp zero-tax-return
distillation, written for the court by Evan Davis, a lawyer in the Justice
Department's tax division.

Since Mr. Schiff already owes millions of dollars in taxes, the government
says fining him would be insignificant and has asked that he be jailed
instead and that two associates of his, Cindy Neun and Larry Cohen, each be
fined $5,000 a day until they, too, comply with the injunction.

Though the government cites a variety of evidence, Mr. Schiff has tried to
place the focus of the case on the fact that his packet is made up of
public records.

"The government wants to jail me for selling documents you can walk into
the courthouse and buy copies of for 50 cents a page," he said after the
hearing on Thursday, surrounded by three dozen supporters he had pulled
together on a day's notice.

Told of Mr. Schiff's tactic, Prof. Eugene Volokh, who teaches First
Amendment courses at U.C.L.A. Law School, said the public-document argument
would not shield the defendant if he was inciting people to commit crimes.

"If indeed what Schiff is doing is illegal commercial advertising -
fraudulent commercial advertising - it doesn't matter if he fraudulently
advertises using the public record," Professor Volokh said. "If the issue
is incitement to commit a crime, it doesn't matter if he quotes from the
public record. The real question is whether the content of the speech is
protected, not so much the source."

Mr. Schiff routinely applies the word "criminal" to federal judges,
including Judge George. His lawyer, Michael Stein, a First Amendment
specialist, said jailing someone for selling public documents - or for
expressing views about federal judges, whatever the merits of those views -
would set a dangerous precedent.

"The most clearly protected speech is the public debate about what is
happening in our court system," said Mr. Stein, who also plans to appeal
the court order. "This injunction is very broad, so broad that it basically
prohibits Mr. Schiff from saying what he believes."

Mr. Stein said the Justice Department was not acting simply on the ground
that Mr. Schiff's zero tax idea is unprotected false commercial speech.
Rather, he said, Mr. Schiff "is being prohibited from saying anything about
the tax laws that is contrary to what the Justice Department says those
laws say."

A notice of appeal from the order prohibiting Mr. Schiff and those acting
in concert with him from selling "The Federal Mafia" has been filed with
the United States Court of Appeals for the Ninth Circuit, said Allen
Lichtenstein, general counsel of the American Civil Liberties Union's
Nevada chapter. That chapter, as well as the American Booksellers
Association, the American Publishers Association, the American Library
Association and the writers' group PEN, will join in asking the appeals
court to vacate the order, Mr. Lichtenstein said.

On Thursday, some of the dozens of people who had turned out in support of
Mr. Schiff chuckled at how he had used public records to continue his
assault on the legitimacy of the tax system.

"He's a real troublemaker, isn't he?" said one of them, who declined to
identify himself.

In interviews, many of those supporters described the federal government as
a criminal organization systematically destroying economic opportunity for
all but the elite and using the tax code to undermine what they called a
right to not have their labor taxed.

Mr. Schiff's appearance at the hearing, held in a dark-paneled courtroom,
brought seven bailiffs and two plainclothesmen, although the supporters
were all polite and orderly.

Judge George began the proceeding with an unusual address lasting nearly 20
minutes. He indicated that he had received letters from many people
denouncing him for the injunction and that some, in crude language,
characterized him as lawless.

He explained that as a trial court judge, he was bound by the decisions of
the Ninth Circuit and the Supreme Court, and that in finding that Mr.
Schiff's zero tax return amounted to tax evasion, he had been following the
precedents of those higher courts.

The hearing on Thursday had not been scheduled until Tuesday, and so,
because Mr. Stein said he had been hired only Wednesday night and needed
time to develop a defense, Judge George set a new hearing for Sept. 4.

Mr. Stein said he expected that his client would be jailed after that
hearing, a view that Mr. Schiff said he unhappily shared.

 

 

Sheldon (Shelly) Waxman, Writer/Lawyer
"The Black Messiah Murders," Sam Cohen #1
"Piranhas On the Loose," Sam Cohen #2
"In the Teeth of the Wind,"
"All Anybody Needs to Know About Independent Contracting"
PURCHASE AT MY WEBSITE: http://thelawyer.info/ OR Call Iuniverse toll free 1-877-823-9235 

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An article at Wired is getting attention at places like Slashdot:

http://www.wired.com/news/business/0,1367,59907,00.html

It seems that someone discovered a hole in an email spammer's database and was able
to grab lots of information concerning Internet users who are apparently placing orders
for those quack nostrums that claim to enlarge a male's, uh, equipment.

The winning comment in the Slashdot discussion thread has to be this one:

"I alone am responsible for all 6000 orders. Soon, very soon, my penis will be the size of North America, and the world will quake in fear."

--dean

Swollen Orders Show Spam's Allure  By Brian McWilliams

Story location: http://www.wired.com/news/business/0,1367,59907,00.html

02:00 AM Aug. 06, 2003 PT

MANCHESTER, New Hampshire -- A security flaw at a website operated by the purveyors of penis-enlargement pills has provided the world with a depressing answer to the question: Who in their right mind would buy something from a spammer?

An order log left exposed at one of Amazing Internet Products' websites revealed that, over a four-week period, some 6,000 people responded to e-mail ads and placed orders for the company's Pinacle herbal supplement. Most customers ordered two bottles of the pills at a price of $50 per bottle.
 

Do the math and you begin to understand why spammers are willing to put up with the wrath of spam recipients, Internet service providers and federal regulators.

Since July 4, Amazing Internet Products would have grossed more than half a million dollars from Goringly.biz, one of several sites operated by the company to hawk its penis pills.

Among the people who responded in July to Amazing's spam, which bore the subject line, "Make your penis HUGE," was the manager of a $6 billion mutual fund, who ordered two bottles of Pinacle to be shipped to his Park Avenue office in New York City. A restaurateur in Boulder, Colorado, requested four bottles. The president of a California firm that sells airplane parts and is active in the local Rotary Club gave out his American Express card number to pay for six bottles, or $300 worth, of Pinacle. The coach of an elementary school lacrosse club in Pennsylvania ordered four bottles of the pills.

Other customers included the head of a credit-repair firm, a chiropractor, a veterinarian, a landscaper and several people from the military. Numerous women also were evidently among Amazing Internet's customers.

All were evidently undaunted by the fact that Amazing's order site contained no phone number, mailing address or e-mail address for contacting the company. Nor were they seemingly concerned that their order data, including their credit card info, addresses and phone numbers, were transmitted to the site without the encryption used by most legitimate online stores.

"There was a picture on the top of the page that said, 'As Seen on TV,' and I guess that made me think it was legit," said a San Diego salesman who ordered two bottles of Pinacle in early July. The man, who asked not to be named, said he has yet to receive his pills, despite the site's promise to fill the order in five days.

A former employee of Amazing Internet Products, who requested anonymity, reported the company's tendency to expose order log files to Wired News. The file was viewable by anyone with a Web browser who truncated one of the Internet addresses published by the company.

Besides legitimate orders, Amazing Internet's log file also contained numerous complaints from spam recipients, who used the order form to register their unhappiness at the site's lack of a proper list-removal option.

Faith York, a rehabilitation counselor in Maine, left Amazing Internet a few choice words last month after an e-mail advertising Pinacle pills slipped through AOL's spam filters and landed in her 10-year-old son's inbox. In a telephone interview last week, York said she lost her temper when she discovered that neither the e-mail nor the ordering site included any means of contacting the company.

"The only way I could send them information was by making up an order, and in the spaces for address and whatnot I described my discontent at them sending my son that kind of e-mail," York said.

The registration record for the site, and the ones for the dozens of other sites used by Amazing Internet Products, provide little help in tracking down the company's owners. The domain records typically list a fictitious registrant and a post office box in Manchester, New Hampshire, along with a nonworking phone number and e-mail address.

To further throw people off its tracks, Amazing Internet and its affiliates send out their loads of junk e-mail using fake return addresses, or the real return address of an innocent third party.

But records on file with the New Hampshire secretary of state show that Braden Bournival, a 19-year-old high-school dropout who is also listed as vice president of the New Hampshire Chess Association, owns Amazing Internet Products.

Bournival refused repeated requests for interviews about his business. When approached for comment at a chess tournament in Merrimack, New Hampshire, last month, Bournival, who is a national-master-caliber player, ran away from a Wired News reporter.

The registered agent for Amazing Internet Products, Mark Wright of Manchester law firm McLane, Graf, Raulerson, & Middleton, also declined to be interviewed.

Amazing Internet leases several thousand square feet of office space at the Tower Mill Center on Bedford Street in Manchester, where, according to the former employee, Bournival's teenage sister fills padded envelopes with bottles of Pinacle and ships them off to customers.

An investigation (registration to Salon.com required) last month revealed that Bournival's mentor and business partner is Davis Wolfgang Hawke, a chess expert and former neo-Nazi leader who turned to the spam business in 1999 after it became public that his father was Jewish.

By all appearances, Bournival's and Hawke's spam business is highly profitable. Amazing Internet pays a supplier around $5 per bottle of pills, and gives affiliates who send spam on its behalf about $10 per order, said the former associate. That leaves plenty of room for a tidy profit in the low-overhead spam business.

But does the stuff work? Amazing Internet's spams make this promise to Pinacle users: "Realistically, you can grow up to 3 FULL INCHES IN LENGTH."

The Federal Trade Commission said there is no proof that the pills work as advertised. But the FTC does not have the resources to press a case against such companies, according to spokesman Richard Cleland.

Earlier this year, Joe Miksch, a columnist for the Fairfield County Weekly, published a humorous account of what happened when he took Pinacle for 30 days. It went something like this: "Day one: No change. Day two: No change. Day three: No change. Days four through 30: See above."

But according to the former associate, Amazing Internet Products makes good on its enlargement guarantee, and -- poor security precautions aside -- protects customers' data.

"I don't know if the stuff works. But Brad has a weird sense of ethics. He would never use a stolen credit card, and he honors requests for refunds," he said.

To that end, one of Amazing's websites, which has since gone offline, listed a toll-free customer service number -- 800-576-4044. The company's PayPal account shows two e-mail addresses: vze3c9sk@verizon.net and frappe_boy@yahoo.com.

August 1, 2003

Unemployment improving?  Yeah, right!  Here's the real story ...

Wall Street wants you to focus on today's unemployment rate,
which fell from 6.4% in June to 6.2% in July.  They say this is
proof positive the economy is healthy.

But the fact is, the Labor Department is undercounting people
who don't have jobs.

Fact:  The civilian labor force fell by 556,000 workers from
June!  In other words, the labor market is contracting.  So,
6.2% unemployed on a declining labor market could actually
mean there are more unemployed souls now than before!

Fact:  The number of "discouraged" workers -- those dropping
out from even looking for a job -- jumped to 470,000 in July.
That's up from 405,000 a year earlier ... and it's certainly NOT
a good sign.

Fact:  The number of jobs in the American economy has
declined for six months in a row!  And making matters worse,
the number of jobs lost in June jumped to 72,000 from the
previously reported 30,000.  That's more than double!
Obviously, the government is having trouble keeping up with
the hemorrhaging of jobs that's going on right now.  Moreover,
it's likely that July's job losses will be revised upward as well.

Fact:  Manufacturing jobs are just melting away, with a
whopping 71,000 disappearing in July alone.  America's
manufacturing sector is being hollowed out as production --
and jobs -- move overseas.

Fact:  The last time the economy added any significant jobs
was back in January -- and that gain has been swamped by
wave after wave of job elimination ever since.

Fact:  Unemployment is going to get worse, not better.  Job
losses just announced that aren't even in the unemployment
rate yet include ...

* Pillowtex Corporation is closing its doors, throwing
6,450 workers out of work.

* Verizon -- America's largest phone company -- is chopping
up to ANOTHER 5,000 jobs this year.  This comes on top of
the 15,000 pink slips that Verizon has handed out in the last
year.

* May Department Stores says it will close 32 Lord & Taylor
stores in 15 states, giving 3,700 workers the ax.  This is in
addition to the 1,500 workers May cut last month.

* Cigna Corp is giving 3,200 employees the boot.  The health
insurer is making the job cuts by the end of the year as part of
a restructuring.

And that's just a few of the companies that are laying off
workers right now, and are expecting to lay off more in the
weeks ahead.  None of this is good news for the economy --
or the markets!

August is a bear month for stocks!

Looking ahead, the market is now sailing into the teeth of
August storms.  The Stock Trader's Almanac shows that
August is the third worst month for the Nasdaq over the last
15 years AND the absolute worst month for both the Dow and
the S&P 500.  August is one of the worst months for the
market, period!

Investors are already battening down the hatches.  TrimTabs
reports that US equity funds saw inflows of $1.2 billion in the
week ending July 30.  That's less than half the $3.2 billion
that flowed into US equity funds in the previous week.

Heck, with a historically stormy August dead ahead, no one
can blame investors for booking profits and jumping ship.  And
with no real fundamental support for today's sky-high stock
prices, it won't take much for that retreat to turn into a rout.

We're watching the markets closely, and we'll continue to play
both sides -- both the temporary rallies and the big sell-off we
believe is coming.  So, stay alert for more updates and recos!