Tax scheme results in
prison time for preparer

A Honolulu tax preparer convicted a third time of tax offenses was sentenced to 10 years in prison yesterday for filing fraudulent tax returns after incorrectly advising clients they could get back all their taxes because they were not U.S. citizens.

Circuit Judge Michael Wilson rejected Richard Basuel's request for probation, saying he had been placed on probation for a similar conviction in 2001 but continued to violate state tax laws and advise individuals that they do not have to pay taxes.

"The facts establish that you have created some enormous problems for people who come to you for tax advice, but you also continue to perpetuate the theory that it's not really necessary for a vast number of people to pay taxes in our community because of what you as a professional has decided," Wilson said.

Basuel, 63, was convicted in February of first-degree theft, 11 counts of tax evasion and 11 counts of making false statements that defrauded the government out of about $23,000 between 1999 and 2001.

Basuel felt he could take on the tax system and was willing to pay the price to attract clients to his tax preparation business knowing he would get a percentage of the returns, Wilson said.

Basuel said he would not accept a jail sentence or a monetary fine. "I order you to dismiss this case without prejudice and without recourse to me for failure to state a claim on which relief could be granted," he told the judge.

Defense attorney Reginald Minn argued that probation was appropriate given that Basuel has been a law-abiding citizen for most of his life, operated a profitable business, provided a valuable service to many immigrants and has contributed to the community in various ways.

"Mr. Basuel is not someone who could have come up with these theories on his own," Minn said, noting that Basuel relied on the advice of purported law professors.

While Basuel has prepared thousands of tax returns, only a relative few -- some who were Hawaiian or part-Hawaiian with nationalist ties and were exploring other ways of preparing taxes -- agreed to use the alternate method he was touting, Minn said.

Deputy Attorney General Larry Goya said Basuel was the "mastermind" behind the scheme, in which he told clients they were not required to pay taxes based on his interpretation of federal tax provisions that do not apply to state tax laws.

The difference in the latest case from his 2001 conviction for tax evasion and aiding in the filing of fraudulent tax returns is that he told clients that he would be entitled to 10 percent of whatever refunds they received.

Basuel was convicted of misdemeanor counts in 2000 for failure to file his personal income tax returns.