Posted on: Friday, July 12, 2002
Resident accused of illicit tax advice
By David Waite
Advertiser Courts Writer
A federal grand jury yesterday indicted a Honolulu man who has made a lucrative living the past 17 years by holding seminars across the country to advise people how to reduce or eliminate their federal and state income taxes.
The indictment accuses Royal Lamarr Hardy, 46, and four others of engaging in two separate conspiracies to defraud the Internal Revenue Service through various tax evasion schemes.
According to the indictment, Hardy's organizations, identified as The Cornerstones of Freedom Research Foundation or simply The Research Foundation, have been selling tax evasion programs throughout the country since 1985 for Hardy's financial benefit.
The others named in the indictment, for allegedly helping to promote and sell the tax avoidance schemes, were: Ursula A. Supnet, 44, also known as Ursula Ann Sounet; Michael L. Kailing, 56; Fred M. Ortiz, 58; and Terry Leroy Cassidy, 50, also known as Leroy Terry Hefley.
Reached at his Manoa home last night, Hardy said he believes that the federal tax agency is "retaliating" against him for his aggressive program of "helping protect people against the tyranny of the IRS."
"If you believe what's in (the indictment), you probably believe in Santa Claus," Hardy said.
Hardy was acquitted by a jury in a federal case almost 10 years ago in which he and another man were accused of laundering drug money and "structuring" money deposits to avoid having to submit "currency transaction reports" to the IRS, as required for cash transactions of more than $10,000. In that earlier case, Hardy and his co-defendant claimed they were entrapped by overzealous federal agents posing as drug dealers.
Hardy said he beat the government "big time in that case and I will do the same thing again this time."
According to the indictment issued yesterday, one of the alleged schemes, known as the "Reliance Defense," consisted of a packet including promotional materials, news articles, opinion letters, cartoons and other information claiming that U.S. citizens are not required to file income tax returns or pay income taxes.
The indictment accuses Hardy and his associates of additional schemes, including the sale of fraudulent bankruptcy filings and the sale of annual statement packages in lieu of filing federal or state income tax returns. The indictment also accuses Hardy of a trust scheme in which he manipulated money in individual retirement accounts by disguising money transfers to appear as legitimate qualified rollovers of retirement money when they were, in fact, tax evasion schemes.
The indictment accuses Hardy and the others of selling tax evasion schemes to people in Hawai'i, Alaska, Washington, Oregon, California, Texas, Florida, South Carolina, Michigan and elsewhere.
Hardy is also accused of hiding substantial income by asking to be paid for his services in cash, blank money orders and checks with the "pay to the order of" line left blank.
The indictment claims Hardy used others to buy costly vehicles for his own use and to pay his personal rent of $9,000 per month in cash. According to the indictment, Hardy and Supnet purchased a 1995 Honda Passport for $34,175 in 1995 and a 1996 Honda Odyssey van for $32,564 in 1996.
Hardy is accused of not filing or paying taxes since at least 1992 and arranging for a false passport so he could use an offshore bank account in the Cayman Islands.
If convicted, Hardy and Supnet face maximum terms of 10 years in prison and a $500,000 fine. Kailing, Ortiz and Cassidy face up to five years in prison and fines of $250,000.
Edward Groves and Thomas Krysa, of the Justice Department's Tax Division, are prosecuting the case.
Reach David Waite at dwaite@honoluluadvertiser.com or 525-8030.
