Former Seminole Tribe leader David Cypress, believed to be the first Native American ever convicted of a federal tax offense, must surrender next month to start a 1-1/2 year prison sentence for understating his income from the tribes $2 billion gambling operation, a federal judge ruled Thursday.
Cypress had sought probation along with four months of house arrest, after having agreed to pay about $5.5 million in overdue income taxes to the Internal Revenue Service for the years 2003 to 2009.
His sentencing hearing offered a rare peek into the Seminole Tribe and its Las Vegas-style gambling enterprise, featuring the Hard Rock Hotel & Casino in Broward County. The Cypress case also conjured comparisons to the IRSs current income-tax crackdown on the Miccosukee Tribe in Miami-Dade County and its former chairman Billy Cypress, no relation.
David Cypress lawyer tried to convince the judge that the 61-year-old former tribal council member committed the crime because of cultural differences between the Broward-based Seminoles and the rest of America. Defense attorney Joel Hirschhorn said Cypress was a simplistic man who didnt grasp he owed personal income taxes as the tribe underwent a rags-to-riches transformation, thanks to its gaming bonanza.
Hirschhorn also argued that Cypress, who apologized in a brief statement, was a victim of the U.S. government, which he said showcased his client as the poster boy for tax compliance on the reservation, perhaps even in all Indian Country.
But U.S. District Judge Kathleen Williams was not swayed, despite recognizing the shameful episodes of the nations mistreatment of Native Americans.
The judge cited evidence that showed Cypress collected $25 million in Seminole income through a double-billing invoice scheme. It involved voucher payments to tribal vendors that secretly ended up in Cypress pocket as personal expenses. Cypress, who represented the Big Cypress Reservation on the Seminole council from 1999 until his resignation in 2010, admitted the misconduct in his guilty plea agreement and factual statement signed in April.
I find what Mr. Cypress pleaded to and agreed to in his proffer was uniquely and sadly American, Williams declared. He was cooking the books.
The judge also noted that she could find no evidence of any Native American anywhere in the country being convicted of a tax offense.
Cypress prison sentence could have been much worse had federal prosecutors been able to prove he willfully committed the double-billing scheme for the entire seven-year period. He was only charged with and pleaded guilty to filing a false tax return in 2007, understating his income by $285,000.
Assistant U.S. Attorney Carolyn Bell, who urged the judge to give Cypress a two-year sentence, mocked the defendants argument that his cultural background prevented him from grasping U.S. tax laws. This was a sophisticated individual, Bell said. He was a leader of the Seminole nation.
Under federal law, the Seminole Tribes status as a sovereign nation means the entity itself is not subject to taxes. But once the tribe distributes profits from its gambling casino to members, they are individually responsible for reporting and paying taxes on their annual income tax returns, according to the IRS.


















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