False Prophet Ronald Weinland

The story of the IRS criminal investigation of Ronald Weinland was broken on this blog a year ago last Saturday, back on August 1 of 2008. There is some confusion about exactly what an IRS criminal investigation is. Some, like Doctor Bob Thiel, seem to confuse a criminal investigation with a more common taxpayer audit. Others seem to think that Weinland will soon be wearing metal bracelets and then checking into his suite at Club Fed. Or perhaps some have forgotten about it, since it was so long ago.  I have done some research on the topic of IRS criminal investigations and am sharing it along with some speculation regarding the case of Ronald Weinland in particular.  As a reminder, the existence of a criminal investigation does not mean that the target is actually guilty — that must be determined in a court of law.

The IRS does not give out information on the progress of its criminal investigations. In fact they will not give out information even if they decide to drop the investigation. The exception would be if the taxpayer specifically authorizes a press release on the case. If the investigation against Weinland is dropped, he might very well want to ask the IRS issue a press release given the public nature of this criminal investigation. Googling “IRS Criminal Investigation” returns several hits discussing Weinland in the first few pages of results. But even should the criminal investigation of Weinland be dropped, that does not necessarily mean that he was cleared — it’s more likely that the IRS decided it would not be able to develop sufficient evidence to overcome its substantial burden of proof in a criminal trial (they might still have sufficient evidence for a finding of civil tax deficiency).

Given the lack of exact information, the following is somewhat speculative. But, it does have some facts and some research to back up the speculation. In addition to the documents filed by Weinland’s attorney with the federal court, I have researched various online sources including the Department of Justice’s Criminal Tax Manual and the Internal Revenue Manual Part 9 which discusses IRS Criminal Investigation (CI). Additionally, there are various statements from Ronnie himself.

The probability of an IRS criminal investigation being initiated against an average taxpayer is very low. Approximately 5 investigations per 100,000 taxpayers are initiated each year, or approximately 0.005%. A criminal investigation is very different from a normal audit, to which around 1% of taxpayers may be subjected. Most of the taxpayer audits which are correspondence audits in which a taxpayer may be asked to provide an explanation or a receipt.

IRS criminal investigations are of different categories. More than half of the investigations relate to taxable income from illegal sources such as drug revenues. For example, Al Capone got away with his gangster activities for awhile but ultimately was put in prison for tax fraud as the result of an IRS criminal investigation. Unfortunately, convincing people to send you all their money based on false prophecies is not regarded as illegally sourced income. Aside from that, I am not aware of any allegations that Weinland is mixed up in drug trafficking, illegal gambling, or similar illegal activities to generate income and am inclined to disbelieve that he is.

My speculation is that the IRS suspects him of tax evasion based on legally sourced income. But perhaps it would be considered illegally sourced income if embezzlement is a factor. This could be the case should Ronnie have taken church funds as personal income without reporting it as such, or if he charged personal expenses to the church account. The fact that church records were included in the IRS administrative summonses suggests this as an avenue of investigation. I am not aware of any independent oversight board within COG-PKG, and written statements Weinland made back in 2000 suggest that The Church of God Inc. is a corporation sole with only Ronald Weinland as a member.

Ron states that everything he has is God’s and that God has given it to him. While he may literally think that, the Internal Revenue code would have a different viewpoint which would be that he would have to pay income tax first before being able to buy what is his/God’s. We also have a statement from Weinland that he is commingling funds based on his statement that church expenses were going on his personal credit card and the church was paying them off monthly. (Weinland’s sermon of 10/27/07 “What has Changed pt 1″, discussion beginning at about 39 minutes.)

His Swiss bank accounts may also factor in, but I doubt they instigated the investigation. I would suspect they would have been brought to light after the investigation started and the third party records were examined. My understanding is that the IRS was not successful at getting records of US depositors from the Swiss bank UBS until after the criminal investigation of Weinland started. Of course if Weinland filed his FBAR forms as required, then his Swiss bank accounts won’t be an issue.

Tax evasion cases are often referred to the IRS Criminal Investigation (CI) division from the civil tax audit division. If your tax return is audited and a deficiency is found, you likely will have to pay the taxes and above that a substantial penalty. But you would not face jail time as the result of a civil tax audit. Civil tax auditors are trained to look for indicators of fraud. If they suspect fraud they are to bring the case to the attention of their supervisor. A trained fraud referral specialist will review the case before turning it over to IRS CI. If a taxpayer case is referred to IRS CI, the civil tax audit stops immediately as the IRS will not jeopardize a criminal case with a simultaneous civil audit. (IRM 1.2.13.1.11(7))

What are indicators of fraud? These are indicators that the taxpayer is taking steps to hide income. Simple violations which can be attributed to honest ignorance are not indicators. After all, the tax code is complicated enough that many people have violated it through simple ignorance. That won’t excuse you from the penalties and being required to pay the tax anyway, but you won’t go to jail for an honest mistake revealed as the result of a civil audit.

Some criminal tax cases are initiated based on tips from informants. But with daughter Audra handling the books, I doubt that the investigation of Weinland was initiated as the result of an informant’s tip. I’m not aware of anyone else who would have sufficient knowledge, even a disgruntled ex-member. For an informant tip, the IRS also needs some proof to start with, as tips are often motivated by revenge and lack substantiation.

IRS CI sometimes develops their own leads. For example, they might have looked at the returns for all the taxpayers who live on the same golf course with Weinland and flagged those whose reported incomes were not consistent with their addresses.

In order to convict someone of tax evasion, the IRS is challenged with a substantial burden of proof. Not only does it have to be proven as in a civil case that taxes were not paid, but this must be proven beyond a reasonable doubt as opposed to by-a-preponderance-of-the-evidence in civil court. Additionally, it must be proven that the taxpayer made an affirmative action to avoid paying taxes, rather than a simple act of omission. Also, it must be shown that this was done willfully. For willfulness it must be proven that the taxpayer intentionally and knowingly violated the law.

IRS CI reviews a case before deciding to accept it for investigation. They will look at a number of factors. But most of all they must estimate it to be highly likely that their investigation would result in a successful prosecution and conviction. Otherwise, they are wasting their limited resources allowing only a few thousand investigations to be launched each year.

In my next post on the topic, I’ll discuss how the criminal investigation might play out.

This entry was posted on Wednesday, August 5th, 2009 at 06:06 and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.