Former Gary Indiana Councilman Convicted for Tax Fraud

A federal jury convicted Gary, Indiana political figures Will Smith, Jr., Roosevelt Powell, and Willie Harris, in September of filing false tax returns over a combined $150,000 in fees they received in the sale of a vacant grocery store to a city redevelopment group.^[1]

Smith, who was sentenced Friday, was County Council president when he was indicted last year.^[2] Powell, an adviser to Gary Mayor Rudy Clay, and Harris, a Gary city attorney, were also convicted in the scheme.^[3] Harris received a 55-month sentence Tuesday; Powell was sentenced to 37 months a week earlier.^[4]

In spite of criticism from state and county officials, Smith refused to step down after his conviction, and didn’t resign until Dec. 29, two days before his term expired and three months after he was convicted.^[5]

Authorities asserted that the three arranged for the Gary Historical and Cultural Society to take ownership of the former supermarket, then arranged for it to be sold to the now-defunct Gary Urban Enterprise Association for $200,000.^[6] The men kept 75 percent of the money from the sale for “finder’s fees,” according to trial testimony.^[7]

Prosecutors asserted that the Historical Society received $50,000 from the deal; Harris kept $50,000 for himself and gave $75,000 to Smith and $25,000 to Powell.^[8] Smith said he was nearly $35,000 behind in payments on a bankruptcy settlement at the time.^[9]

Attempt to evade or defeat tax
This crime is covered under 26 U.S.C. § 7201 wherein it states that any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than 5 years, or both, together with the costs of prosecution.^[10]Additionally 26 U.S.C. § 7206 covers fraud and false statements and that section declares that any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.^[11]

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^[1] AP Staff, Ex-councilman sentenced for tax fraud, Associated Press Newswire, January 19, 2008, January 9, 2008, available at LEXIS, News Library, Wire News Services.
^[2] Id.
^[3] Id.
^[4] Id.
^[5] Id.
^[6] Id.
^[7] Id.
^[8] Id.
^[9] Id.
^[10] 26 U.S.C. § 7201(2007).
^[11] 26 U.S.C. § 7206(1)(2007).