Tax service owner gets
40-month term for fraud

The owner of the state's former second-largest tax preparation service was sentenced yesterday to three years and four months in federal prison for helping individuals file false federal tax returns.

A federal jury convicted Richard Basuel of RB Tax Service in May of conspiracy and 20 counts of aiding and abetting in the filing of fraudulent tax returns.

Basuel, 64, was among five people, including his son and three employees, indicted by a federal grand jury in February 2004 on charges they conspired to falsely claim $4 million in tax refunds for clients in 1999. Basuel is currently serving a 10-year term in state prison for the same conduct, but involving the filing of state income tax returns.

Visiting District Judge Wallace Tashima acknowledged the numerous letters he received in support of Basuel for his success as a tax preparer and his numerous contributions to the Filipino community. But he said Basuel had breached the trust of the entire community.

"I'm convinced he knew what he was doing and at some point realized he was wrong and continued with that effort," Tashima said.

Defense attorney Reginald Minn argued that Basuel should be sentenced to no more than two years, with credit for the 19 months he has served in state prison, because of his contributions.

For 25 years, Basuel led a law-abiding life and prepared taxes for many socioeconomically disadvantaged working folks in Waipahu and Kalihi, Minn said. Basuel was also an active contributor to the Filipino community here and in the Philippines, providing scholarships for Filipino youths, Minn said.

But Basuel got his ideas after attending a seminar held by tax protester Al Beyer in 1999, Minn said.

Basuel "fell off the track" and got involved with Beyer largely because of the public shame and humiliation he experienced in 2000 after the IRS searched his businesses, Minn said. The IRS had been flagging federal tax returns prepared by RB Tax Service. That was because the returns claimed the first $74,000 earned in Hawaii qualified as "foreign-earned income" on which filers did not have to pay income taxes.

"Looking back at the beginning, I wish I hadn't gone to those seminars," Basuel said in his only statement to the court.

Assistant U.S. Attorney William Shipley had argued that the five-year statutory maximum would be a fair sentence.

"The 'abyss' Mr. Basuel fell into in 2001 is inexplicable -- how a gentleman with that much experience with tax preparation can turn 180 degrees and do things that make no sense," Shipley said.

Nevertheless, the government agreed that Basuel was entitled to the 19 months of credit that he already served on the state side because his conduct there was related to the federal convictions.

Tashima agreed and factored in the 19-month credit in arriving at his decision. He also ordered Basuel to serve three years on supervised release once he is released.

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