Roger Stone Denies Scheme to Avoid Tax Debt After Russia Probe

Nov. 23, 2021, 3:59 PM

Roger Stone and his wife, Nydia Stone, denied trying to fool the IRS through a scheme to buy a Florida residence with separate entities before stopping payments on an approximately $2 million tax debt.

The denial came in a court filing from the pair, who were accused of trying “to defraud the United States” to avoid paying their tax debt in a lawsuit the government filed in April. As of early April, the couple together owed nearly $1.6 million in taxes, interest, and penalties, and Roger Stone separately owed about $400,000 more, plus further interest and additions that continued to accrue, according to the government.

The couple on Monday admitted they face outstanding tax balances, but said they lack knowledge about the specific figures the government alleged.

“The Stones have been upfront with the IRS about their income, assets, and liabilities. They have filed appropriate returns. And they have consistently shared information with the IRS necessary to evaluate and reach agreement upon any required payment arrangements,” the pair told the U.S. District Court for the Southern District of Florida.

The government has linked the alleged fraud to the legal troubles Roger Stone faced in the wake of Robert Mueller’s investigation into Russian interference in the 2016 presidential election. He was charged in January 2019 with obstruction, making false statements, and witness tampering in relation to the investigation, and was ultimately convicted on all charges.

Soon after the indictment, the couple created a trust to buy a Florida residence they later lived in, using money from a company they controlled, the government has said. The government’s lawsuit described that timing as evidence that the purchase of the residence through separate entities was part of a fraudulent scheme.

The Stones said Monday that the Mueller investigation and subsequent trial almost bankrupted Roger, rendering him unable to make payments under an installment agreement with the IRS. They argued the government ignored efforts the pair made through their tax counsel to begin discussions on resuming a payment plan.

The couple’s filing came on the same day Roger Stone was subpoenaed as part of a House committee investigation into the Jan. 6 attack on the Capitol. Former President Donald Trump granted him a pardon for his conviction in December 2020. The presidential pardon power doesn’t extend to civil actions such as the government’s lawsuit over the tax liabilities.

Money Movements

The couple allegedly evaded government efforts to collect on their liabilities by placing more than $1 million into the company from 2018 to 2019 through transfers and through depositing checks for Roger into the company’s accounts. While they paid more than $500,000 toward their tax debts from those accounts, they also used the money to finance “a lavish lifestyle,” the government said.

The Stones admitted Monday that Roger deposited checks into the company’s accounts and that they transferred money from their personal account to the company’s accounts, but insisted there was “no nefarious purpose.” They said he uses the company to do consulting work and other business, and that the government has always been given any requested information on the company’s finances.

The government wants the court to enter judgment against the Stones for the tax liabilities, declare that the residence belongs to the Stones, and declare that already-existing tax liens are enforceable against all property—including the residence—held by the Stones, the company, and the trust.

Judge Rodolfo A. Ruiz II re-opened the case on Nov. 1 after granting an unopposed request from the Stones for a pause.

The case is United States v. Stone, S.D. Fla., No. 0:21-cv-60825, answer 11/22/21.

To contact the reporter on this story: Aysha Bagchi in Washington at abagchi@bloombergtax.com

To contact the editors responsible for this story: Patrick Ambrosio at pambrosio@bloombergtax.com; Kathy Larsen at klarsen@bloombergtax.com

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