LOOKING IN ON: CARSON CITY

Saturday, Dec. 29, 2007 | 7:29 a.m.

CARSON CITY - Irwin Schiff, an "irascible" 79-year-old nationally known tax protester, has won a legal point in his battle with the government, but he still may have to spend more than 13 years in prison for violating federal income tax law at his Las Vegas business.

From his store, Schiff sold books, audiotapes and instruction packages and offered consultation services on how to avoid paying federal income taxes. More than 100,000 copies of his publications have been sold.

Schiff and his two employees encouraged customers not to file income tax returns and then to seek refunds of all taxes withheld during the year.

Charges were filed against Schiff and his two employees, Cynthia Neun and Lawrence Cohen. In a 2005 trial in Las Vegas, all three were convicted, with Federal District Judge Kent Dawson finding Schiff guilty of an additional 15 counts of criminal contempt for his unruly courtroom behavior while acting as his own lawyer.

The U.S. Ninth Circuit Court of Appeals has upheld Schiff's convictions on charges that include filing false income tax returns, assisting in filing false returns, tax evasion and conspiracy to defraud the government - charges that resulted in a 151-month sentence. The court also upheld Neun's 11-count conviction but overturned Cohen's conviction.

But it also ruled that Dawson failed to follow the proper procedure in citing Schiff for contempt. During the trial, Schiff continually asked questions based on erroneous premises - including his contention that no one is required to file a tax return - prompting Dawson to issue repeated warnings, followed by contempt citations.

The appeals court said that although Dawson was "understandably exasperated" by the behavior of the "irascible" Schiff, the judge failed to issue or sign the required contempt orders detailing that behavior.

The appeals court sent the case back to Dawson to sign the orders and to resentence Schiff.

It also said Dawson made a mathematical error in adding a 12-month contempt sentence to run consecutively with Schiff's 151-month term. The maximum additional sentence for the contempt citations, the court said, is 11 months.

In what may be the first of many such sales, the state has sold $100 million in bonds to help build an energy-saving project to supply hot and cold water to the Echelon Place resort and surrounding developments.

The low-interest industrial development bonds will help create a small heating and chilled water facility and emergency backup power for several facilities on the Las Vegas Strip, said Lon DeWeese, chief financial officer for the state Housing Division, which sold the bonds.

"This is the first of what we hope are many energy-saving projects," said Mendy Elliott, director of the state Business and Industry Department. "This is a great utilization of the bond process."

The bond money will be used by LVE Energy Partners LLC to build the power plant. The company will put in an additional $100 million to $200 million to finance the project.

DeWeese said LVE will be responsible for paying off the bonds. "The bonds are not an obligation of the state," DeWeese said.

State Housing Director Charles Horsey said LVE Energy has contracts to sell the hot and cold water to Morgan Hotel Group, the shopping center adjacent to the property and a nearby fire station.

The LVE project is fueled by natural gas and will produce energy savings, Elliott said.