Attorney for Corina Ifopo plays the culture card in tax fraud case

Says IRS and ASG are to blame for not educating the public on illegal tax filings
fili@samoanews.com

Anchorage, ALASKA — The defense attorney for Corina Ifopo, the American Samoa woman accused of filing false tax returns with the US Internal Revenue Service, argues that the defendant’s conduct should be viewed through the lens of the economic challenges in the territory, where many homes are without running water and electricity, and many children receive their only meal at school.

Assistant Federal Public Defender, Jamie McGardy appears to blame the IRS and the American Samoa Government for failing to post public warnings that it’s illegal for local residents to file off island, according to the defense’s sentencing memorandum — which includes photos of Ifopo’s home in the territory which was destroyed by Tropical Storm Gita last month.

Ifopo’s sentencing memo was filed Tuesday with the federal court in Anchorage, Alaska, where she will be sentenced next week after pleading guilty last year to 28 counts of filing false tax returns for residents of American Samoa who don't quality to receive the federal Earned Income Tax Credit.

Through her attorney, Ifopo is requesting a mitigated sentence of one year and one day in custody, followed by three years supervised release — conditioned on payment of restitution of $167,574.00

In the sentencing document, McGardy outlined justification for the sentence being sought, saying this “case is unique in several respects”.

McGardy first acknowledged that the defendant “exercised extraordinarily poor judgment in connection with this case” and when confronted, she fully cooperated with authorities, and assumed full responsibility by pleading to all 28 counts of the indictment.

“Ms. Ifopo’s conduct should be viewed through the lens of the economic challenges that face American Samoa,” the defense said, adding that the local average wage is just $2- $3 an hour; while unemployment rate hovered around 24% in 2010.

Over 60% of households with children under 18 years of age live in poverty in American Samoa, argued the defense, citing economic data on American Samoa posted on the South Pacific Community website (spc.int)

“Many homes are without running water and electricity, and many children receive their only meal at school,” McGardy said, adding that the tuna canneries is the island’s main industry and most of the “good jobs” are with the local government.

“In addition to crippling poverty, the residents of American Samoa also have to deal with extreme weather events on a regular basis — cyclones, earthquakes, and tsunamis are not uncommon,” the defense said and noted that Ifopo’s own home was completely destroyed by Gita last month.

There’s no mention in the document on why the defense submitted the photos of Ifopo’s destroyed home, which sustained severe damage. There's no mention either if Ifopo or her family has applied for federal disaster assistance.

McGardy did reveal that Ifopo learned how to file off-island tax returns from her brother, who was filing off-island tax returns for friends and family. The defense didn’t identify the brother by name, but noted that once word spread that Ifopo knew how to file off-island tax returns, friends, neighbors, and extended family approached her for help.

“They were people who had to pay for funerals, an extraordinary expense in American Samoa; people who needed help with repairs on their homes; people who were struggling to pay their bills and living in challenging conditions,” McGardy said. “It was unthinkable that Ms. Ifopo would turn them away, in a culture where helping one’s neighbors is so paramount.”

For further understanding of the court, when it comes to local funeral expenses, the defense explained in a footnote that according to two local funeral homes — “funerals in Samoa are multi-day events where entire tribes gather to mourn and celebrate the dead; costs range from $15,000 to $60,000 per funeral, and the expense is divided among the family.”

The defense also summarized information from - www.funeralwise.com/customs/Samoan - about Samoan funerals, which are “flooded with gifts for the family. In return, families return gifts to the visitors. This practice can be quite a financial burden on Samoan families—particularly if there are a number of funerals in a short amount of time. Gifts include money and fine hand woven mats.”

McGardy went on to blame the lack of public awareness programs as the reason local residents file taxes off island.

Samoa News points out that McGardy was the defense attorney for another American Samoa woman, Pepe Anetipa, who was charged at the Anchorage federal court in December 2014 and sentenced to jail in November the following year, for crimes similar to what Ifopo is charged with.

In Ifopo’s sentencing memo, McGardy recalled that local residents were interviewed in 2015 for a prior case (referring to Anetipa’s case), and recipients — referring to those who received money for filing off island — had no idea whether filing off-island tax returns was legal at the time they did it.  Additionally, the IRS has no office in the territory and McGardy says the agency “does nothing to educate the general public about the dangers of this practice.”

The defense also blamed ASG for  “no incentive to discourage residents from filing off-island tax returns.”

(Samoa News notes that since the Togiola Administration, the government has consistently warned the public — through the local media — that it’s illegal to file taxes off island. And Samoa News had published many stories on the issue — going back 10 years).

In fact, McGardy said, ASG “receives a twofold windfall when residents file off-island returns”. First, most residents who file off-island tax returns do not file local tax returns, so the local government enjoys a significant savings in the form of unpaid returns.

Second, those residents who do receive refunds from the federal government use that money on the island and infuse the local economy with much needed revenue, according to the defense.

“If the local government actually wanted to deter local residents from filing off-island tax returns, they could easily, and cheaply, plaster the walls of the [tax] office with admonishments and warnings about the consequences of filing Federal Tax returns,” it says, adding that there are no billboards on the roadside discouraging such practice, while there are a lot of billboards for other matters.

“In fact, on an island where the average resident has no television in their home, and many residents don’t read or speak English, there is no evidence whatsoever of a campaign to educate local residents about this practice,” argues the defense, adding that it “found only a few mentions of the scheme in the local newspaper.”

(The scheme referred to by the defense is Anetipa’s case. However, Samoa News has reported several times in the past decades, warnings from local officials — including former Gov. Togiola Tulafono — that it's illegal to file with the IRS.)

“This deficient notification severely compounds a problem in a culture marked by extreme poverty and deprivation,” said McGardy, adding that the defense had found during local interviews in the 2015 case that recipients had friends and family members who received returns from the federal government with no adverse consequences.

“The only campaign that the IRS has undertaken, it would seem, is to offer up the few preparers who are selectively prosecuted, as sacrificial lambs for the community as a warning, after the fact,” the defense said.

As to “Ifopo’s culpability,” the defense said her involvement “began innocently enough” and explained that once her name spread as an off-island tax preparer, “go-betweens would bring her W-2s and she would prepare the returns”.

The defense explains that at first, Ifopo would charge a percentage per return, but often would not be paid. Later, she started splitting the refunds, or depositing the refunds into her bank account and then giving the cash to the go-betweens for disbursement.

The defense alleges that “IRS agents never asked Ifopo about these go-betweens, but Ifopo would give the returns back to these folks and assume that the returns would then be given to the correct recipients. It appears from IRS interviews with the actual filers that these folks often times kept the returns, and were enriched, without assuming any of the risk.”

“Although Ms. Ifopo was also unjustly enriched by the scheme, much of the total amount of loss to the government went directly back to the island,” McGardy argued, adding that Ifopo “was not living an extravagant lifestyle of travel and luxury goods.”

She didn’t buy a new house or a new car, or make significant home repairs; but instead used the money to support her extended family and gave a significant portion back to the residents of American Samoa.

“What Ms. Ifopo did was wrong — at some point, she became aware that filing the returns was illegal and she persisted at the behest of friends and family. She now takes responsibility for this decision and asks the Court to view her transgressions in the context of the larger issue,” the defense said adding that Ifopo has many positive attributes that contribute to her potential for rehabilitation and which suggest that a minimum period of incarceration is the most appropriate.”

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