The post-holiday trial in Dallas of a Texas couple accused – along with their lawyer – of conspiring to evade their taxes began Tuesday with a reference to A Christmas Carol.
As a freshly selected jury settled in, federal prosecutors told them that the case before them is much like the opening lines of the Charles Dickens classic: just as there was no doubt that Jacob Marley was dead, the three defendants knew they owed money to the IRS but didn’t pay it.
“There is no doubt whatever about that,” Robert Kemins, a lawyer for the government, told jurors during his opening statement.
The government has accused Thomas and Michelle Selgas of hiding income from their technology business in the IOLTA account of their lawyer, John O. Green. Green, who is licensed to practice in Texas and lists his office in Athens, is also a sitting state representative in Idaho, where he was elected despite publicity surrounding his indictment.
Together, the three are accused of obstructing the Internal Revenue Service from assessing and collecting the Selgases’ federal income taxes. The government alleges the trio did so by: 1) transferring the Selgases’ funds to Green’s IOLTA account from which their personal expenses were subsequently paid, 2) filing a false partnership tax return, and 3) converting cash proceeds into gold coins.
Lawyers for the defendants told jurors the government’s claims are meritless, suggesting they were brought as a result of government incompetence on display when the IRS sent assessment letters to a wrong address for the Selgases two years in a row.
“The IRS has gotten a little bit angry and a little bit vindictive of bad paperwork that’s been filed so many times,” said Houston attorney Michael Minns, who represents Green.
Mr. and Mrs. Selgas, who are defending themselves separately, each face up to five years in prison on the conspiracy charge brought against them. Additionally, if convicted, they face one count of tax evasion, which could result in a five-year maximum sentence. If convicted, Green also faces up to five years on the conspiracy charge.
According to the indictment, the Selgases began evading their taxes in 1998. Charles MacFarland, who represents Mr. Selgas, said that characterization is wrong.
“He sent three different tax returns in for different amounts asking the IRS, ‘How much do I owe?’ They ignored him,” MacFarland told the jury.
As for Mrs. Selgas, defense attorney John Helms told the jury, the idea of her conspiring to evade taxes is laughable since she left the household’s financial matters up to her husband.
As a “country girl” from Purcell, Oklahoma, Mrs. Selgas “never wanted a career in the sense of we think of normally,” Helms said.
“She always wanted to get married raise a family,” he said. “She wanted a marriage based on the biblical model — the husband makes the decisions and is the head of the household.”
Helms said she made none of the decisions at the company despite a 25% partnership interest in MyMail, her husband’s intellectual property business. That business yielded a $1.1 million distribution to the Selgases after a 2005 lawsuit settlement that the government claims the couple never reported.
“She loved him, she [respected him], so she went along with what his decision was,” Helms said. “At no time did she think she was doing anything wrong.”
Kemins told jurors that the Selgases believed in a “founding fathers” theory of income taxation: basically, that the country’s founding fathers didn’t care much for the idea of an income tax. Kemins said the Selgases cited that “founding fathers” theory when they told a business partner that their $1.1 million settlement distribution should be valued at only $175,000.
Likewise, said Kemins, they took the same approach to property taxes on their Athens, Texas home, which they purchased in 2008 with $368,000 worth of gold coins. Each year, they protest the value of their house, alleging that it’s worth only $16,000.
“Every year they lose,” Kemins said.