Miami judge threatens Miccosukee leader with fines if he fails to turn over tax records to IRS

A federal judge Monday warned Miccosukee Tribe Chairman Colley Billie that she would hit him with fines if he continues to defy her order to turn over income tax and other tribal financial documents sought by the Internal Revenue Service in its probe of his political rival.

Justice Department lawyers asked U.S. District Judge Kathleen Williams to issue contempt-of-court sanctions against Billie for failing to supply the documents and answer the IRS’ questions about the widening personal tax liabilities of his predecessor, former longtime Chairman Billy Cypress.

The IRS, which has been investigating the West Miami-Dade tribe for nearly a decade, alleges Cypress failed to pay personal taxes on potentially millions of dollars in alleged unreported income between 2003 and 2010.

Williams stopped short of carrying out the sanctions, but ordered Billie and the tribe’s lawyer to reach a meeting of the minds this week with the Justice Department and IRS over a 2012 summons for tribal financial records related to Cypress.

“Chairman Billie will sit down with the IRS today or tomorrow,” Williams declared at the end of the hearing. “If it doesn’t happen, there will be a considerable, personal daily fine on the chairman.”

Last week, Williams ordered the contempt-of-court showdown for Monday, days before Billie and Cypress face off in the tribe’s Nov. 10 election to pick its leader.

Although the IRS acknowledged that Billie turned over some W-2 income tax forms related to Cypress, the current chairman has refused to provide other tribal records or answer an IRS agent’s questions in person. Billie first consented to comply with the IRS summons, but then changed his mind, citing his Fifth Amendment rights against self-incrimination.

“Billie’s last-minute attempt to invoke his Fifth Amendment rights in no way relieved Billie of his responsibility to abide by the court’s order,” Justice Department lawyer William Farrior wrote in a motion seeking contempt sanctions.

Williams, the judge, agreed with that argument, saying “there is no such thing as a blanket Fifth Amendment assertion in this context.”

But the tribe’s lawyer, Bernardo Roman III, said that the current chairman, Billie, was concerned about walking into a “perjury trap” if he had to respond to IRS questions about tribal financial matters involving Cypress about which he might not know anything.

“If the chairman has a legitimate Fifth Amendment right, he must do that question by question, document by document,” Williams said.

The case of Billie having to defend himself against potential sanctions — fines or incarceration — is rich with irony. When he took over the reins of the tribe in early 2010, Billie fired two former U.S. attorneys who represented the tribe during Cypress’ tenure; authorized the tribe to sue those lawyers for alleged malpractice; and ultimately directed the Miccosukees to sue Cypress for allegedly embezzling $26 million over the past decade.

Moreover, the IRS is also targeting the tribe for its alleged failure to withhold potentially tens of millions of dollars in income taxes on its annual distributions of casino gambling profits to members — a policy authorized by Cypress as Miccosukee chairman. So far, the IRS has placed $170 million in tax liens on the tribe for back taxes, interest and penalties.

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