CLEVELAND, Ohio— A jury on Wednesday found a Strongsville dentist, who hasn’t paid federal income taxes since 1992, guilty of tax evasion.
The jury of nine women and three men deliberated for less than two hours before finding Douglas Smith, a self-described “sovereign citizen,” guilty of four tax-evasion charges.
Smith, a dentist since 1982, acted as his own attorney during the three-day trial in federal court in Cleveland. He testified on his own behalf that he believed he was exempt from paying taxes because, among other reasons, he was never “elected” to be a U.S. or Ohio citizen.
U.S. District Judge Dan Polster set sentencing for Feb. 7. He allowed Smith to stay out of jail or prison until then because he said he didn’t want to “jeopardize” Smith’s patients. Polster stipulated that Smith must send his paychecks to the IRS.
“Mr. Smith has a thought process that’s different from most of us,” said Craig Weintraub, Smith’s stand-by attorney appointed by Polster. “Proceeding pro se is always dangerous.”
The verdict brought an end to a sometimes bizarre trial that featured, among other things, Smith questioning himself on the witness stand. Smith’s only other defense witness testified that God gave him the right to practice law, but he conceded he never went to law school or is licensed to practice law in any state.
The oddity of the trial drew spectators from around the federal courthouse, including prosecutors and another judge.
Adding to the unusual proceedings, Smith must serve a six-month prison sentence for contempt of court for violating several of Polster’s orders to stop filing motions that attempted to make the judge and prosecutors on the case fiduciaries of a trust Smith set up. One such attempt happened on Tuesday in the middle of trial.
Polster also fined Smith $5,000 and an additional $1,000 for each day he hasn’t paid since Sept. 26 for the pretrial antics. Smith continues to accrue the daily penalty.
Federal prosecutors said Smith, 68, evaded taxes and tried to escape scrutiny of his income in three ways: transferring his money and property into a trust, buying some $250,000 in gold bars and coins and filing for bankruptcy in 2013. During his bankruptcy proceedings, he made false statements and ultimately tried to challenge the legality of bankruptcy court. The IRS in 2012 seized the gold from Smith’s home.
IRS agents testified that he owed about $492,000 in income taxes from 2007 to 2017 that he never paid. Smith mostly worked as a contractor, which meant that his employers didn’t withhold taxes from his pay.
Smith, who testified by reading a printout of questions and answers, grew up in Cleveland, went to Miami University and Case Western Reserve University’s School of Dental Medicine.
In the 1980s, he met a group that he said “looked into” the legality of taxes and other governmental functions. He later linked up with a similar group called Right Way L.A.W., a prominent sovereign citizen group in Ohio in the 1990s and early 2000s. He said he attended meetings and “studied” with them for about 20 years.
Smith said he sought information about sovereign citizens from the Sovereign Education Defense Ministry, a website that offers advice, for a fee, to people about their perceived legality of taxes and other issues.
He also relied on advice from Paul Hansen, who operates two websites dedicated to assisting sovereign citizens who believe they are exempt from U.S. law. Hansen testified that he charges between $35 to $70 an hour for legal advice. He said that advice draws on his reading of U.S. law and the Bible.
Hansen said that he tells clients that only about 10% to 15% of people are actually required to pay taxes and that the U.S. Secretary of State or the tax commissioner are required to personally notify citizens when they must pay taxes.
He also testified he hadn’t paid taxes in 20 years, including for some $1.8 million of land and houses he owns.
“All laws are territorially limited, including God’s law, which is limited to the universe,” Hansen said.
He sometimes sparred with Polster, who told him to limit his answers to the questions Smith asked.
“Are you going to refuse me the opportunity to tell the truth here?” Hansen shot back.
Under cross-examination, Assistant U.S. Attorney Robert Patton asked if he had any formal legal training, including attending law school or if he was licensed to practice law in any state.
“I believe God gave me that right,” Hansen said.
Smith argued that he followed Hansen’s advice and theories, which included that a person must “elect” to be a citizen.
He asked each prosecutor’s witness the same questions: If they had evidence that he was required to pay taxes; if they had evidence that he elected to be a U.S. citizen; and if they had proof that he was a “person” as defined by the law.
IRS agent John O’Boyle answered by saying: “You were born in Michigan. It’s not about election.”
Smith during his closing argument said he tried to “avoid taxes, not evade them.”
“I know some or all of you are struggling with this because you pay income taxes,” Smith told the jury. “Most people believe they have to. The government wants you to connect the dots in your head.”
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