Soldotna slope worker convicted of tax evasion

  • Sunday, October 5, 2014 9:47pm
  • News

A Soldotna man was convicted of seven federal tax crimes in U.S. District Court in Anchorage last week.

James Back, 60, a North Slope worker employed by the Alyeska Pipeline Service Co., was found guilty of filing false income tax returns from 2006 to 2008 and for failure to file his returns from 2009 to 2012, according to an Oct. 2 release from U.S. Attorney Karen Loeffler.

Back, who represented himself at trial, worked as a pipeline technician at Pump Station 1 in Prudhoe Bay.

After three days of trial, evidence showed Back earned more than $125,000 in wages during each of the prosecution year, but falsely claimed his wages were zero from 2006 to 2008. From 2009 to 2012, Back failed to file, according to the release.

Back contributed more than $140,000 to a retirement plan, had investment accounts worth hundreds of thousands of dollars, owned property in the Kenai Peninsula Borough, and purchased more than $400,000 in gold and silver bullion during the prosecution years, according to the release.

Back argued “taxation was immoral and unfair, and he refused to submit to it anymore,” according to the release.

Despite applying for the Alaska Permanent Fund Dividend each year, he argued the check was not taxable. Back ignored prior warnings from his employer, supervisor, the Internal Revenue Service and a U.S. Tax Court judge, according to the release.

Witness testimony linked Back’s scheme as similar to one used by Peter Hendrickson of Michigan who wrote a book, “Cracking the Code” which promotes the “zero wages” tax evasion scheme. In 1992, Hendrickson was convicted of failure to file tax returns and firebombing a Michigan U.S. Post Office in 1990 and served 21 months in prison, according to federal court records.

Chief U.S. District Judge Ralph Beistline described Back as “unrepentant” and his crimes as “flagrant.”

“Using schemes and tactics intended to willfully conceal income from the IRS isn’t tax planning, it’s criminal activity,” said Special Agent Teri Alexander with the IRS Criminal Investigation. “There is no secret formula that can eliminate a person’s tax obligations. The verdict reinforces our commitment to every American taxpayer that we will identify and prosecute those who use abusive scams designed to evade the payment of taxes.”

Back was remanded to the custody of the U.S. Marshal to await sentencing, which is scheduled for Dec. 16.

Back faces up to three years in prison on each of the three false return counts and a maximum of a year in prison on each of the four counts of failure to file.

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