Published January 19, 2007
CONCORD, N.H. – A man who has holed up with armed supporters in his fortress-like house for most of his tax evasion trial was found guilty Thursday, along with his wife, of engaging in an elaborate scheme to avoid paying federal income taxes for a decade.
Ed Brown has said he will defend himself against capture if necessary; U.S. marshals said they have no plan of escalating the situation.
A jury decided the Browns plotted to hide their income and avoid taxes on Elaine Brown's income of $1.9 million between 1996 and 2003. Over 10 years, they also used $215,890 of postal money orders broken into increments just below the reporting threshold to pay for their hilltop compound and for Elaine Brown's dental offices.
A jury also found she didn't pay adequate taxes for her practice's employees, leading to a total of 17 felony convictions.
"I just hope this (verdict) sends a message to those who would rely on frivolous tax theories," Assistant U.S. Attorney Bill Morse said afterward.
Ed Brown heard of the verdict in the middle of an interview with a radio station. "The verdict is in. I can guarantee you all hell's going to break loose," he told WNTK-FM in New London.
He later said, "It's all bogus charges. None of these charges are lawful."
Ed Brown stayed in his wooded, 110-acre home this week. The large, cement-walled house features a watchtower that offers 360-degree views of the rural setting. He said the home is capable of generating enough electricity to operate if cut off from the main grid.
"My life is destroyed, what more can I say?" Brown said when reached for a brief phone conversation. "I lost my wife and she lost her business."
Brown said he expected federal agents to swarm his property soon.
"Live free or die," he said, quoting Gen. John Stark and the state's motto. "What else can I say?"
Brown and about 25 supporters said they will defend themselves against capture if necessary. Bernie Bastian, a supporter who said he was carrying two guns, said they would stand with their friend.
"He's here at the house, and he's not leaving of his own free will," Bastian said.
It's unclear how many others were carrying weapons.
"We don't like to talk about that. It's cold up here. People up here are wearing their jackets," Bastian said.
The frenzy came up during the question of leaving Elaine Brown out on bail pending the couple's April 24 sentencing. Judge Steven McAuliffe reminded Brown that she was, under no circumstances, to return to the home.
"I don't want her to barricade herself with her husband up there," McAuliffe said.
Brown said his way of handling the case is not hers.
"It's not in my mind-set or my character," Elaine Brown said. "I have no intention of returning as long as he's there."
Ed Brown is in contempt of court and has violated his bail conditions, Morse said.
"Mr. Brown has indicated he's rather die than serve a prison sentence. ... I just hope Ed decides to end this in a way that doesn't result in harm to him or his wife or anyone else involved in bringing this matter to justice," Morse said.
On Wednesday, Brown told reporters at his home: "If I should be killed or imprisoned, or my wife is killed or imprisoned, or both, those responsible will join us."
U.S. Marshal Stephen Monier said Thursday that members of his staff continued talking by telephone with Brown, but had no plans to confront him. It could be months before the Browns are sentenced and marshals have to consider how to seize the Browns' assets, possibly including their home.
"We've established a good line of communication, all of our conversations have been amicable and friendly, and that's how we expect they will continue," Monier said.
The Browns, who were charged with conspiring to evade taxes, conspiring to disguise large financial transactions and disguising large transactions, maintained there was no law requiring them to pay federal income taxes.
Elaine Brown, who earned most of the couple's income, attended proceedings and accepted a court-appointed attorney to help her. She considered, then rejected a plea bargain earlier this week. McAuliffe has allowed her to stay with her son, who lives in Worcester, Mass., but not in her home.
She testified she had tried to work out a payment plan with the Internal Revenue Service in the early 1990s after her tax bill significantly exceeded her estimates one year, the Concord Monitor reported.
She said the IRS didn't respond for months, then demanded that she pay her bill in full, plus interest and penalties, even though she had made payments. She said she eventually refused to pay when she later learned of an additional fine for $3,300 and the money was seized from her bank account.
"Some people are drawn to the anti-tax movements and the false representation that there is no legal requirement to file and pay taxes. Today's verdict clearly reaffirms the repeated rejection of these arguments in the courts," IRS Special Agent Douglas Bricker said in a statement.
On Thursday, a jury found that the couple spent $215,890 through 311 postal money orders on real estate principal. The couple purchased four, $700 postal money orders at a time to pay their bills. By staying under what was then a $3,000 threshold, they avoided federal reporting and intended to keep the government guessing about their income.
The jury found the Browns must forfeit $215,000, at least part of which must by satisfied by giving up their home or the dental practice's offices.
Ed Brown, a retired exterminator, stayed home to protest a system he said had already convicted him and a media he said was in search of soundbites over truth.
"Most Americans would cower and cringe and raise their hands and surrender like a good little slave," he said this week.
"I won't. Under no circumstances. I do not tolerate cowardliness, oppression, bulliness, and I certainly don't tolerate a federal agency that has absolutely zero jurisdiction in my state, never mind in my county, in my town."
During the past few decades, Brown has claimed membership in several anti-government and militia groups including the Constitution Rangers of the Continental Congress of 1777, the Constitution Defense Militia and the UnAmerican Activities Investigations Commission, which he founded.