David Cypress, Tax-Evading Former Seminole Leader, Sentenced to Federal Prison
From the uncharted universe next door that is government on the Seminole reservation, comes a likely first for Native Americans: a former tribal leader is going to prison on tax evasion charges.
David Cypress, a member of the Seminole tribal council until 2010, was convicted of filing a false tax return, understating his income by $285,000. Prosecutors revealed a system by which he pay himself extra money from the tribe's lucrative casinos under the table.
Cypress was sentenced yesterday to one-and-a-half years in federal prison.
The case also revealed some of the tribe's internal economics, including the size of the monthly dividend check sent to each family.
Cypress's lawyer Joel Hirschhorn revealed that gaming profits were $300 million per year in 2001. The Miami Herald did the math: with monthly payments to the tribe's 3,800 members, a family of four gets a check for about $30,000 a month.
From the victorious U.S. Attorney's press release:
Specifically, Cypress received approximately $285,433 in taxable distributions from The Seminole Tribe of Florida, which he knowingly and willfully failed to report on his 2007 federal tax return. The unreported income consisted of payments made to certain vendors for personal expenses paid on his behalf. The vendors would submit vouchers requesting payment to The Seminole Tribe of Florida, which were coded to conceal the fact that Cypress was the beneficiary of the payments and falsely described the reason for payment. Cypress authorized payment of these vouchers knowing the true basis of the request for payment, and that he was to be the beneficiary of the payment. Correct copies of the vouchers were also provided by the vendors, then destroyed.
In addition to his plea of guilty to the criminal charge, as part of the plea agreement Cypress agreed to pay $5,457,889 as restitution to the IRS, which includes tax, interest and penalties which the IRS has determined are due and owing by him for tax years 2003 - 2009 as of March 15, 2012.
The judge in the case, Kathleen Williams, noted in court that she didn't know of any other Native American being convicted of a tax offense.
U.S. Indian law states that profits accrued to a tribe as a whole are not taxable -- but once income from gambling business makes it to individual members, those members are responsible for correctly reporting their earnings and paying taxes to the IRS.
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