Tax rebel spurs legal spinoffs

Las Vegas business owner Robert Kahre is spawning legal dramas beyond his ongoing trial for federal tax evasion and fraud.

Two spinoffs are civil lawsuits filed by Kahre against various public servants. One alleges the investigation of his taxes violated civil rights and involved brutality. Another suit alleges witnesses in the present trial were unduly pressured to testify for the government to save themselves, thus constituting obstruction of justice. An appeal panel recently dismissed the latter lawsuit, but Kahre's lawyer says the fight is not over.

In a third court spinoff, Kahre is not a legal party but the topic. The American Civil Liberties Union of Nevada is trying to unseal all filings by federal prosecutors in relation to subpoenas served on the Las Vegas Review-Journal to get information about people who commented online.

The U.S. attorney's office argues the ACLU's effort to protect the privacy of people who posted anonymous comments online about the Kahre criminal trial is "moot" -- or no longer relevant -- because the newspaper has already complied with a subpoena.

But the ACLU argues the question is still alive. "This Court can still provide relief to the plaintiffs," reads an ACLU motion filed Monday, by ordering prosecutors to destroy the newspaper's data, instead of using it to sniff out the writers.

A judge also can issue an order to prevent future subpoenas "to obtain information about critics of the government's position in the Kahre case," the motion notes.

The Review-Journal resisted a first subpoena that sought data on all people who commented, but it turned over limited data after the government crafted a narrower subpoena focusing only on the authors of two comments.

One said the jury "should be hung" if its members convict Kahre. The other offered to wager with a currency from "Star Trek" that one particular prosecutor would die soon. The comments were among several hundred posted below a May 26 article about the start of the Kahre trial. The newspaper later pulled both comments from its Web site, but they appear anew in the government's June 26 filing.

Federal Judge Kent Dawson has drawn the assignment of settling the subpoena skirmish, but has not yet ruled. Dawson himself has become a bone of contention.

The ACLU wants him to recuse himself from the case because he could appear biased on two grounds. First, Dawson already had recused himself from Kahre's criminal trial, and second, Dawson and his family were protected by guards after he received threats during the 2005 tax trial and conviction of Irwin Schiff, a flamboyant author of anti-tax tracts.

Dawson "felt threatened by tax protesters who spoke out and agitated in favor of a defendant in a high-profile tax case," the ACLU wrote in its July 8 motion for recusal. It questions whether Dawson can remain impartial in the Review-Journal's "subpoena case, where the very question raised is whether comments by similar critics of the U.S. taxation system ... rise to the level of a true threat."

In late June, a three-judge panel of the 9th U.S. Circuit Court of Appeals ruled against Kahre's RICO claim that agents of the U.S. attorney's office, the Internal Revenue Service, the FBI and several local police departments conspired to ruin him financially -- by raiding his businesses in May 2003 to collect tax evidence for the present trial and by compromising witnesses. Kahre believes some witnesses have pumped up their testimony to win lighter sentences for their own tax crimes.

The RICO Act, which stands for Racketeer Influenced and Corrupt Organizations Act, typically is applied against organized crime figures, not government employees.

Federal Judge David Ezra dismissed the conspiracy complaint in December, and is now presiding at Kahre's criminal trial. The appeals panel that upheld Ezra's dismissal on June 29 wrote, "The conduct (Kahre) complains of is legitimate law enforcement activity carried out in the course of the officers' employment."

Kahre, according to his attorney, plans to appeal. "It's disappointing. And it's not over," lawyer William Cohan said.

A separate civil rights lawsuit, in which Kahre and many of his workers are plaintiffs, is on hold until after the criminal case ends. During the raid, workers were held outdoors at gunpoint for several hours in heat without water or shade.

Kahre's criminal trial is not yet half through, as prosecutors are still presenting their side. In a prior trial before Judge Robert Jones in 2007, on largely the same issues, the government obtained zero convictions of the nine defendants.

But because of a split among jurors, Kahre was neither convicted nor acquitted, hence his present trial on a reformulated set of charges.

This time around, the other defendants are his longtime girlfriend Danille Cline, his sister Lori Kahre and a former assistant, Alex Loglia.

Kahre, his sister and Loglia have said they believed they were minimizing their taxes in legal fashion when they accepted $50 gold and $1 silver coins for pay, and then went by the coins' face value for tax purposes. Kahre also sold his unique coin-based payroll service -- which allowed workers to immediately trade the coins for paper cash at the coins' market value -- to 35 other local businesses.

To convict, the government must prove the defendants acted with intent to defraud, rather than out of ignorance.

Contact reporter Joan Whitely at jwhitely@reviewjournal.com or 702-383-0268.