Tax Protesters

November 18, 2004

This is a Report from Dessie  as Al was talking to her.

At 9:47 Pacific time, I received a cell phone call from Al Thompson, recently released from jail after spending three months for contempt of court.  He told he saw flashing lights in his rear view mirror, and discerning that it was an unmarked car behind him, made the decision not to stop as he was afraid for his life.

He kept traveling on the highway I-5 and just north of Hilltop, met up with California Highway patrol who had laid the tire shredder strips across the road.  He ran over those and came to a stop.  He called me as he was sitting there.  He said he was surrounded, and the men in the unmarked car appeared to be Federal Marshals.  He said the incident had turned into a high profile thing and there were a lot of guns pointing at him.

He told me to hang on, he was going to call his son, I was on hold for about 40 seconds, and then the phone was reconnected briefly for not quite a second.  I heard what sounded like a commotion, with some voices, a few unintelligible words and the phone went dead.

I looked on Pacer and could find not reason for the assault.



SACRAMENTO--United States Attorney McGregor W. Scott and IRS Criminal Investigation Special Agent in Charge Roger L. Wirth announced today that a federal grand jury has returned a seventeen-count indictment charging JOSEPH BANISTER, 41, of San Jose, California and WALTER A. THOMPSON, 57, of Redding, California with multiple tax crimes.

BANISTER and THOMPSON each are charged with one count of conspiring to defraud the United States by impairing and impeding the Internal Revenue Service with regard to approximately $259,669 in income and employment taxes during the period of July, 2000 through December 31,
2002. In addition, BANISTER is charged with three counts of aiding and assisting the filing of false tax returns for THOMPSON for the 1996, 1997 and 1998 tax years.

In addition to the conspiracy count, THOMPSON is charged with two counts of filing false claims with the IRS, one count of filing a false income tax return with the IRS, and ten counts of willfully 
failing to collect and pay over approximately $176,215 in taxes from the wages and salaries of employees.

This case is the product of an extensive investigation by the Internal Revenue Service, Criminal Investigation Special Agents.

According to Assistant United States Attorneys Robert M. Twiss and Carolyn K. Delaney, who are prosecuting the case, the indictment alleges that THOMPSON owned and operated Cencal Sales ("CENCAL"), an aviation flight bag manufacturing business located in Shasta Lake, California. CENCAL employed a number of hourly wage workers who were predominantly seamstresses, production managers or office workers.

BANISTER, a Certified Public Accountant ("CPA") and former Special Agent in the Criminal Investigation Division of the Internal Revenue Service, is alleged to have entered into a conspiracy with THOMPSON to remove employees of CENCAL from the taxpayer rolls by no longer withholding employment taxes from wages and salaries, not filing Employer's Quarterly Tax Returns, Form 941, and not providing the employees or the IRS with annual wage or other income statements, Forms W-2 or 1099, as required by law.

The conspiracy count alleges that on July 21, 2000, THOMPSON falsely advised CENCAL employees that the compensation which they received in return for their labor was not "income" within the meaning of the internal revenue laws and that they were not required to pay individual income taxes on the compensation which they received from CENCAL. THOMPSON stopped withholding income and employment taxes from his employees in July of 2000, and stopped filing Employers' Quarterly Tax Returns and Forms W-2 at the same time.

The indictment further alleges that there was a second meeting on October 11, 2000 at which THOMPSON and BANISTER again falsely advised CENCAL employees that the compensation which they received was not "income" and that they were not required to pay individual income taxes on those wages. BANISTER assured the employees of CENCAL that THOMPSON would not lie to them regarding the tax issues.

The indictment further alleges that BANISTER prepared false Amended Individual Income Tax Returns, Forms 1040X , for THOMPSON and his spouse for 1996, 1997 and 1998. THOMPSON had filed returns for these three years, reporting over $300,000 in total income for the three years and substantial taxes. The amended returns purported to reduce the amount of income and tax in each year to $0, and sought refunds of approximately $65,000 for 1996 and 1997, and to eliminate a tax liability in the amount of $15,500 for 1998. THOMPSON signed and
filed the fraudulent amended returns with the Internal Revenue Service at the Fresno Service Center.

Ten counts of the indictment charge THOMPSON with willfully failing to deduct, collect, account for and pay over to the IRS those federal income and employment taxes due on the wages paid to the employees of CENCAL between July 1, 2000 and December 31, 2002.

"The blatant and far-reaching defrauding of honest taxpayers by these two individuals warrants an aggressive federal prosecution. This case should serve as a stark reminder to our citizens that caution should be heeded when approached by those advocating wild theories as to why one does not have to obey federal tax laws," stated United States Attorney Scott.

"Joe Banister, a former IRS agent, knew exactly what he was doing. Tax professionals and employers who break the law will be held accountable," said IRS Commissioner Mark W. Everson.

According to IRS Criminal Investigation Special Agent in Charge Roger Wirth, "Taxpayers shouldn't be taken in by false descriptions of the law or misrepresentations of the facts. Dozens of taxpayers were adversely affected by the actions of Mr. Banister and Mr. Thompson."

If convicted of all counts with which they are charged, the maximum penalty to which defendant BANISTER could be sentenced is imprisonment for 14 years and a fine of $1,000,000. The maximum penalty to which defendant THOMPSON could be sentenced if convicted of all counts is imprisonment for 68 years and a fine of $3,500,000.

The charges are only allegations and the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.



Photo courtesy of Freddy Rice

ARRESTED AGAIN: Tax protester Walter "Al" Thompson kneels as officers handcuff him after a pursuit on Interstate 5 Thursday morning.

Feds nab tax resister on I-5 
Man who refuses to pay leads agents in meandering pursuit

By Maline Hazle, Record Searchlight
November 19, 2004

Tax resister Walter "Al" Thompson led federal agents up and down Interstate 5 Thursday morning before a spike strip laid by California Highway Patrol officers blew out his front tires just north of Highway 44. 

Thompson, 57, of Redding at first refused to get out of his car, but after about 10 minutes surrendered at gunpoint when officers sent a dog to remove him from his Buick Aurora, CHP Lt. Jeff Lee said. 

The meandering pursuit, prompted by a 14-count federal indictment for tax crimes, was just the latest -- and potentially the most seri-ous -- incident in the saga of Thompson, a one-time congressional candidate who found national prominence among those who believe that income taxes are illegal. 

Although he's done short stints in jail for contempt of court, this time he faces up to 68 years in federal prison and a $3.5 million fine. 

Lee said CHP units joined the chase near Mountain Gate after federal agents, driving an unmarked car, radioed for help. 

The agents, armed with an arrest warrant based on the indictment, first tried to stop him on Hilltop Drive in Redding, Lee said. 

But Thompson led them on and off Interstate 5 and finally headed south again near Mountain Gate, where two CHP cars and a plane joined the chase, Lee said. 

Speeds during the pursuit varied from 80 to 100 miles per hour, Lee said. 

During the pursuit, the New York Times reported today, Thompson used his cell phone to call Cindy Nuen, the girlfriend of a Las Vegas tax protester, who later posted her version of the conversation on a Web site. 

"Cindy, at this moment I am being chased by about five California Highway Patrol cars and at least one U.S. Marshal's vehicle," Thompson reportedly opened the call. 

"I'm going to make them take me. I'm not pulling over," Nuen reported Thompson said, later adding "OK, they got the tires. They got my car. Now they are out -- they all have their guns pointed -- they got me." 

Then the phone went dead, Nuen said, adding a plea that readers protest Thompson's arrest. 

Shasta Lake resident Freddy Rice, 43, watched the arrest through binoculars from a nearby overpass after hearing truck drivers talking about the pursuit on their CB radios. 

"He was on his cell phone," Rice said. "He just sat there about 10 minutes or so and ignored them." 

Lee said that although traffic was relatively light on the freeway during the 9:30 a.m. chase, officers were eager to stop the pursuit to avoid collisions. 

He said units behind the CHP pursuit cars slowed traffic and held it back while a unit came in from the opposite direction with the spike strip. 

When the traffic in front of Thompson cleared, the officer flipped the strip across the freeway "and he ran right over it. It flattened both front tires," Lee said. 

In addition to the federal charges he faces, Thompson will be charged in state court with failure to yield to officers, Lee said. 

Thompson, one-time owner of Cencal Sales, a flight-bag manufacturer in Shasta Lake, was taken to Sacramento, where he was to appear in court today, said Patty Pontello, a spokeswoman for the U.S. Attorney's office. 

Also named in the indictment, announced Thursday, was a former special agent in the criminal investigation division of the Internal Revenue Service, Joseph Banister, 41, of San Jose. 

Banister, a certified public accountant, and Thompson allegedly conspired to remove Cencal employees from the taxpayer rolls -- a scheme accomplished by Thompson's refusal to withhold employment taxes from their pay or to file quarterly tax returns. 

In addition, Thompson did not give employees or the IRS annual wage or income statements, as required by law, authorities said. 

Thompson allegedly met with employees on July 21, 2000, and told them they were not required by law to pay taxes. 

Banister then joined Thompson for a second meeting with employees on Oct. 11, 2000, the indictment alleges. At that meeting, Banister allegedly assured the workers that Thompson would not lie to them about tax issues. 

Dozens of employees were affected by Thompson's and Banister's alleged assurances, said IRS Criminal Investigation Special Agent in Charge Roger Wirth in a statement urging taxpayers to be leery of "false descriptions of the law or misrepresentations of the facts." 

In addition, Banister is accused of preparing false amended individual income tax returns for Thompson and his then-wife, Denise, for the years 1996 through 1998. 

Thompson already had filed returns for those three years, reporting more than $300,000 in income, the indictment said. 

But the amended returns reduced the amount of income and tax in each year to zero and requested refunds of $65,000 for 1996 and 1997 and also to eliminate a $15,500 tax liability for 1998, the indictment said. 

Thompson and Banister both are charged with conspiring to defraud the government. 

As a former IRS agent, Banister "knew exactly what he was doing," IRS commissioner Mark W. Everson said Thursday. 

In addition, Thompson is charged with two counts of filing false claims with the IRS, one count of filing a false income tax return and 10 counts of willfully failing to collect and pay more than $176,000 in taxes from Cencal employee wages. 

Banister, who was arrested Thursday, also is charged with three counts of aiding and assisting the filing of false tax returns. 

If convicted on all four counts, Banister faces 14 years in federal prison and a $1 million fine, Pontello said. 

Thompson contends that federal income tax laws were repealed in 1939 and that virtually everyone is exempt from filing. 

He gained national attention four years ago today when New York Times reporter David Cay Johnston wrote the first of several articles chronicling his resistance movement. Johnston later won a Pulitzer Prize for his coverage. 

Thompson was arrested in April, and again in August for contempt of court after he allegedly failed to obey court orders to pay almost $500,000 in back taxes and penalties. 

He was held for three months after the August arrest and finally released when a federal judge ruled that incarceration apparently wasn't going to force him to pay. 

But the investigation continued. 

"This case should serve as a stark reminder to our citizens that caution should be heeded when approached by those advocating wild theories as to why one does not have to obey federal tax laws," said U.S. Attorney McGregor Scott. 

Reporter Maline Hazle can be reached at 225-8266 or at

Copyright 2004, Redding. All Rights Reserved.

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