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TABLES TURNED IN TAX CASE
" Nothing in this world is certain but death and taxes:"
That famous quote by Benjamin Franklin resonates loudly with John M. Mathewson.
For more than 10 years, Mathewson, 82, who ran an illegal offshore tax shelter used by hundreds of Americans, helped the u.s. government recover more than $3 billion. His help prompted officials from all three branches of government to label him one of the most important cooperators in tax revenue history.
He is now in a legal battle with the Internal Revenue Service over $11.3 million in unpaid taxes dating to the 1970s and 1980s. The IRS said the amount has ballooned with interest and penalties to more than $31 million.
Mathewson argues that, after he was sentenced for tax evasion and money laundering in 1999, he was told by the feds that they were not worried by his tax debt and they would not pursue it, as long as he continued to cooperate. The IRS says Mathewson has no proof that conversation ever happened.
The IRS is going after him administratively, based on a civil judgment it obtained against him in 1993. in 2006, the IRS filed a lien on his home and notified his employer, an oil and gas drilling company.
Separately, IRS agents have been investigating Mathewson for two years, spurred partly by an informant who is
involved in a legal partnership dispute with Mathewson's employer.
Mathewson sued the IRS in 2005 after he tried to get his tax records and after the IRS responded that it could not find his old tax returns and that others had been destroyed. The suit asks the U.S. District Court to issue an order saying he had a deal.
His attorneys argue that the government has double-crossed a man who paid his debt to society. He served five years of probation for his guilty plea and kept his side of the bargain.
Since his sentencing, Mathewson has filed tax returns every year and applied any refunds to his current year tax not taken to pay back taxes. However the IRS claims that the IRS cannot forgive taxes against anybody and that Mathewson has yet to
provide the name of any agent who told him his debt would be wiped off the books.
Upon his initial arrest, Mathewson fully cooperated with the IRS and turned over a list detailing information of more than 1,000 customers Mathewson had assisting in setting up offshore accounts in the Cayman Islands. He provided a treasure trove of tapes documenting the transactions; however neither IRS experts nor computer whizzes in the private sector could decrypt them. Mathewson provided the needed assistance.
He also provided background information that helped in unrelated prosecutions and in across the country and before Congress.
He sat in jail the first night with FBI agents who arrested him and by the next morning, the government had learned more about offshore banking they could have learned in years of conventional investigation.
Paul O'Neill, former Secretary of the Treasury Department, which includes the IRS, said in 2001 that the IRS developed dozens of tax-evasion cases with Mathewson's help. With Mathewson's information, the IRS was able to persuade judges to force U.S. credit card companies to open their client lists so the IRS could see who was hiding assets.
"These cases were made possible because of Mr. Mathewson's extraordinary cooperation; O'Neill told reporters in May 200l. "Without it this large-scale illegal tax evasion would have gone unpunished. When the entirety of Mathewson's cooperation is utilized, the benefits to both the criminal and civil law enforcement authorities of the United States will be immeasurable:”
Despite his help, the IRS says Mathewson should not get a pass.
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