A federal jury on Friday convicted Joseph and Elizabeth “Daisy” Kupfer of three counts of tax evasion involving owed taxes of about $286,000.
After a week of sometimes numbing testimony that included many overhead slide projections of checks, jurors returned their verdict Friday afternoon after deliberating for about six hours.
Key to conviction of the couple was intent to not pay taxes, or willful avoidance.
For Assistant U.S. Attorney Tara Neda, that was a no-brainer, in large part because the sum in question on which the Kupfers failed to pay tax was over $750,000.
“Who among us would not remember cashing a $100,000 check?” she asked in her closing statement. “Maybe Warren Buffett.”
The majority of the checks were from A. Gutierrez and Associates, a Corpus Christi consulting firm to the secretary of state that was awarded state contracts through the Help America Vote Act. Armando Gutierrez, AGA’s owner, is a codefendant with the Kupfers in separate counts in the indictment scheduled for trial in the fall.
Defense attorney Erlinda Johnson stressed the fact that the Kupfers had gone to a tax specialist, a certified public accountant whose job was to bring the Kupfers into compliance for three tax years – 2004, 2005 and 2006.
“In 2004, the Kupfers had serious tax problems,” she said, “But that’s not a crime.
“Kupfer Consulting earned a lot of money. True. But that’s not a crime,” she said.
It’s not a crime to fail to report income, Johnson said, and it becomes a crime only if it was done willfully and intentionally.
Billy Blackburn, who was defending Joseph Kupfer, suggested the tax forms the Kupfers signed were much like the mounds of paperwork purchasers sign at a real estate closing, or the stacks of federal privacy notices that mount up with each doctor visit. Almost nobody reads every word before signing, he said.
As with a plumber, you don’t want to know the details, you just want it to work, he said.
“That’s what happened when Joe Kupfer went to see (the CPA) in 2004. He was in a world of hurt.”
The tax specialist knew that neither Kupfer had a college degree and that they were not sophisticated about taxes. Joe Kupfer couldn’t tell a W-2 (wage statement from an employer) from a 1099 (payments to an independent contractor), Blackburn said.
It was the 1099s that were the problem. AGA didn’t supply them to Kupfer Consulting, but as the prosecution pointed out, that didn’t mean tax on the payments wasn’t due and owing.
Neda told jurors that the IRS agent who investigated the case compiled documents showing the Kupfers “had to have known” that they owed tax on payments from AGA and had “chosen not to report.”