Las Vegas Sun

July 31, 2014

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Appeals court denies dismissal of case against employer who paid works in gold coins

A panel of a federal appeals court has upheld the conviction of three Las Vegas residents in a $16 million tax evasion case in which employees were paid in gold and silver coins.

The three-judge panel of the U.S. Ninth Circuit Court of Appeals said today that Hawaii District Judge David Ezra, sitting in Las Vegas, ruled correctly on a number of defense objections in the 2009 trial of Robert Kahre, his sister Lori Kahre and business consultant Alexander Loglia.

A federal indictment said Robert Kahre, who operated several contracting businesses, paid his workers in the gold or silver coins — which were then exchanged for cash — but never collected or paid income and employee taxes.

The government maintained during trial that from 1998 to 2003, Robert Kahre paid his employees in gold and silver coins or cash but no federal taxes were withheld. He was also accused of evading $1 million in federal taxes from 1992 and 1993.

At trial, Robert Kahre testified he used the system because the IRS was a foreign agent for the World Bank and the International Money Fund. The panel of the court said "Kahre relied on several statutes, regulations and 'Presidential Documents' in the process of developing his payroll system to avoid the collection of taxes on behalf of foreign agents."

Robert Kahre was sentenced to 190 months in prison for his conviction of 49 counts of failing to pay employment taxes, two counts of attempting to interfere with the administration of IRS laws, four counts of tax evasion and one count of wire fraud. He also was ordered to pay more than $16 million to the IRS.

Lori Kahre received a prison term of 72 months and must pay $31,000 in restitution after being convicted of two counts of attempting to interfere with the administration of IRS laws, one count of making a false statement to a bank and seven counts of tax evasion.

Loglia received a prison sentence of 26 months and was ordered to pay $83,000 in restitution on his convictions: one count of filing a false income tax return and 10 counts of tax evasion.

The appeals panel rejected the defendants' claim that the indictment should be dismissed because the three did not have "sufficient notice of the illegality of relying on the face value of coins to avoid paying taxes." The panel said Judge Ezra correctly calculated Robert Kahre's tax liability and that the judge did not make any errors in excluding some evidence.

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