Promoting Fictitious Bonds for Tax Payments Leads to Conviction for “Sovereign Citizen”

By Alistair M. Nevius, J.D.

Court Decisions

A proponent of the “sovereign citizens” movement and self-proclaimed president of the “Republic for the United States of America” has been convicted of conspiracy to defraud the United States through a series of seminars in which attendees were taught to pay their federal income taxes by filing fictitious bonds (Turner, No. 1:12cr169-MHT (M.D. Ala. 3/25/13)).

Followers of the sovereign citizens movement maintain that individuals can decide which laws to obey. One tactic they practice involves engaging in protracted legal battles in which the individual files numerous court filings espousing various legal theories couched in a coded “truth language” that requires a lexicon to decipher.

The defendant, James Timothy Turner, is president of what is reportedly the largest sovereign citizens group, the Republic for the United States of America. In September 2012, he was indicted by a federal grand jury on 10 counts, including a charge of conspiracy to defraud the United States.

The government demonstrated that Turner and his co-conspirator, Billy Ray Hall, put on a series of seminars around the country in which they taught attendees how to file fictitious bonds and other fictitious financial instruments as a way to pay their taxes and other debts. According to the government, the charge to attend these seminars was $150 and one pre-1964 silver dollar. The district court held that the filing of the fictitious bonds was done to defraud the United States.

The indictment said that Turner also caused “false, fictitious, and fraudulent financial instruments” to be filed with the IRS, Treasury, and other government entities. In 2008, according to the indictment, Turner filed a fictitious bond in the amount of $300 million in purported payment of taxes and other debts. The indictment also said that he helped co-conspirators file fictitious $100 billion bonds with the IRS.

Turner’s indictment also charged him with violating Sec. 7212(a) by falsely reporting payments to the IRS on various tax forms and with failure to file a tax return in 2009.

After a trial, a jury found Turner guilty of:

  • Conspiracy to defraud the United States;
  • Attempting to pass a false or fictitious instrument;
  • Aiding and abetting an attempt to pass a false or fictitious instrument;
  • Corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws;
  • Failing to file a tax return; and
  • False testimony under oath in a bankruptcy proceeding.

Sentencing is set to take place on July 29. According to the Justice Department, Turner faces up to 164 years in prison and a potential fine of up to $2,350,000.

Newsletter Articles

50th ANNIVERSARY

50 years of The Tax Adviser

The January 2020 issue marks the 50th anniversary of The Tax Adviser, which was first published in January 1970. Over the coming year, we will be looking back at early issues of the magazine, highlighting interesting tidbits.

TAX RELIEF

Quirks spurred by COVID-19 tax relief

This article discusses some procedural and administrative quirks that have emerged with the new tax legislative, regulatory, and procedural guidance related to COVID-19.