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IRS case reveals spending of ousted Miccosukee leader

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Sunday, 22 August 2010

IRS case reveals spending of ousted Miccosukee leader The Miccosukees' former chairman obtained millions in cash advances from tribe funds at its casino in West Miami-Dade and on trips to gambling destinations, according to records in a new IRS tax case against him. Saturday, 08.21.10 BY JAY WEAVER This email address is being protected from spam bots, you need Javascript enabled to view it During two weeks in Las Vegas, Miccosukee chairman Billy Cypress drew $226,600 in cash advances from his tribe-issued credit card. In 31 visits to Texas de Brazil in Miami, he rang up $112,699 in bills. And in a single day, he charged $34,511 at the Miami electronics store BrandsMart USA. Details of the West Miami-Dade Indian tribe leader's personal financial transactions were disclosed in a federal tax case brought against Cypress in Washington, publicly revealing for the first time IRS claims that he owes the government almost $2.8 million in taxes and penalties on $6.65 million in unreported income from 2003-05. About half of that unreported income came from cash advances on tribe-issued credit cards, according to IRS records obtained by The Miami Herald. Cypress used tribal funds at hotels, casinos, restaurants, sports venues and on spending sprees, the agency records show. The Internal Revenue Service asserts all that spending amounted to taxable income, but his lawyers disagree. The IRS says Cypress' income totaled $10.7 million for the three-year period. The agency sent him a tax-deficiency notice in April, part of its ongoing investigation into Cypress, who was ousted as the tribe's leader early this year. Also in April, the IRS issued a civil summons for records generated by Cypress' two credit cards and three other tribe-issued charge cards held at Morgan Stanley Smith Barney in Miami. SECRET DEAL After five months of battling in federal court, the tribe's legal team and the Justice Department reached a ``confidential agreement'' Thursday to turn over the Morgan Stanley records -- though it's not clear which credit card statements, charge receipts and other documents the Miccosukees agreed to provide. The settlement was reached after U.S. District Judge Alan S. Gold rejected the tribe's defense that it did not have to turn them over because of the Miccosukees' status as a sovereign nation. The IRS' civil probe of Cypress grew out of an investigation, started in 2005, into the tribe's distribution of millions of dollars in cash from its gambling operations to Cypress and hundreds of other members -- without anyone reporting the money as taxable income, according to federal court records. TRIPS AND CASINOS In the case against Cypress, his personal lawyer, Michael Tein, asserted that some $3.7 million in credit card charges, debit card transactions and cash advances flagged by the IRS were ``nontaxable'' because the ``travel, entertainment and retail purchases related to tribal business development.'' The IRS records show that Cypress made hundreds of card transactions at his tribe's own gambling facility off the Tamiami Trail and during trips to Las Vegas, Biloxi, Miss., Foxwoods, Conn., and several other casino venues from 2003-05. He also made hundreds of charges at restaurants and retail stores, including AmericanAirlines Arena, the former Pro Player Stadium and Burdines/Macy's. Tein, who is partners with Guy Lewis, a former U.S. attorney in Miami, said in the tax case that some of those credit-card and debit transactions were ``duplicative'' -- counted twice by the IRS. In court papers, Tein also said that the Miccosukees' distribution of $302,900 from the tribe's gambling-operation profits to Cypress in 2003-05 was ``nontaxable.'' His argument: the tribe already imposes ``assessments'' on its gambling operations and distributes that revenue to its members. Therefore, the money cannot be taxed again by the IRS. SUBJECT TO TAXES The Miccosukees may be the only one of about 240 Indian tribes with American gambling facilities to make such a claim, which has failed in the past, according to legal experts and Indian regulatory authorities. The Indian Gaming Regulatory Act, passed by Congress in 1988, requires tribes with gambling facilities to report all member payments to federal authorities. The law specifically says such ``payments are subject to federal taxation.'' The Miccosukees have never filed a required ``revenue allocation plan'' with the Bureau of Indian Affairs to show how much gambling income from their bingo-style slot machines and poker games is distributed to members. http://www.miamiherald.com/2010/08/20/1785716/irs-case-reveals-spending-of-ousted.html

 

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