Audio By Carbonatix
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.
