Paul Andrew, Mitchell, B.A., M.S.
Counselor at Law and federal witness
c/o 2509 N. Campbell, #1776
Tucson, Arizona state, USA
zip code exempt (formerly DMM 122.32)
Under Protest and by Special Visitation
with explicit reservation of all rights
UNITED STATES DISTRICT COURT
JUDICIAL DISTRICT OF ARIZONA
IN RE GRAND JURY SUBPOENA ) Case No. GJ-95-1-6 (JMR)
SERVED ON )
NEW LIFE HEALTH CENTER COMPANY ) JOINT AFFIDAVIT OF
) DR. AND MRS. EUGENE BURNS AND
_______________________________) DR. AND MRS. SHELDON DEAL
In re: the income tax matters of Dr. Eugene A. and Mrs.
Linda H. Burns, Dr. Sheldon C. and Mrs. Cindy M. Deal, all
Citizens of Arizona state, and the New Life Health Center Company
(currently an Unincorporated Business Trust company comprised of
four health food retail outlets).
Subject of this Affidavit
The abusive and illegal tactics of certain agents of the
"Internal Revenue Service" and the United States Department of
Justice employed against the People and the Trust listed above.
Years in Question
Beginning January 1, 1978 and through and including December
31, 1995.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 1 of 17
Purpose of this Affidavit
This will be an effort to explain, in the broadest terms,
the events of abuse which have continued for over 15 years to the
aforementioned persons.
Opening Statement
Deal and Burns are licensed Chiropractic Doctors and
business people who have never been convicted of a serious crime
and who have attempted to conduct their personal business lives
according to the laws passed by Congress and enforced by law
enforcement agencies. They are conservative Republicans who are
active in their community and care about the future of our
Country. Contrary to the position of the IRS, Burns and Deal are
NOT illegal tax protesters as otherwise asserted by certain
agents of the IRS. Burns and Deal have always preserved their
First Amendment Rights, as guaranteed by the Constitution for the
United States of America, to voice their opposition to the
wrongful acts of our government when, in their opinion, wrongful
acts have been committed. In the first place, to "protest" is a
fundamental Right and, since that it is true, then the term
"illegal" must modify the tax in order for this term to be
constitutional.
There is no question that they entered into certain private
programs, subject to the review by competent Counsel, with the
objective being to preserve assets, to limit tax liability, and
to conduct estate planning. They have always felt that this was
the pathway to accumulating wealth. Little did they know that
the "programs" they joined would become the target of the federal
government, and thereby plunge them into a whirlpool of
litigation costing hundreds of thousands of dollars and years of
constant harassment by way of a blizzard of audits and court
appearances extending from 1981 to the present.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 2 of 17
Counsel Employed
Cecil Hartman Joe Izen Bill Cohan G. Singh Khalsa
John Standifer Art Tranakos Ralph Seifelt
Howard Feldman Jim Schook, CPA Jim Everett
(present)
Government Agents Involved with this Case
Justice Department:
Steven Furth* Bernie Knight* Don Overall*
"*" means Washington, D.C.
Robert Johnson (Phoenix) Rachel Zepeda (Phoenix)
Internal Revenue Service:
Melvin Martineau (auditor) Tucson
Sharon Bennett (auditor) Tucson (since left the Service)
John Magee (auditor) Tucson (retired)
Jeri L. Cantrell (Collection) Tucson
Courts in which Burns & Deal Have Sought Remedies
Tax Court (twice), Federal District Court, Ninth Circuit
Court of Appeals, Supreme Court and finally Bankruptcy Court
(twice).
Remedies Sought and Received
To somehow shift the burden to the government so that it is
they who must prove the amount of taxable liability due, rather
than Burns and Deal attempting to prove otherwise. So far it has
not been possible.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 3 of 17
Goal of this Report
To somehow put the pressure on the Department of Justice to
settle this case. To come to a legitimate tax due which all
parties can live with and afford. The Justice Department refuses
to settle this case under any circumstances. At present, there
are liens and levies placed upon Burns/Deal and NLHC in excess of
$4,000,000! Hardly affordable.
Overview
In late of 1977, Burns and Deal, accompanied by competent
Counsel (Howard Feldman, tax attorney, and Jim Schook, CPA)
attended a week-long seminar conducted by Karl Dahlstrom of the
American Law Association. At the end of this seminar, it was
determined by their Counsel that this would be a "legal means" by
which Persons could preserve their assets, limit their tax
liabilities, and plan their estates. Burns and Deal filed a
final tax return for New Life Health Center ("NLHC") (at that
time an Arizona Corporation) on December 1977. The assets of the
Corporation were transferred into the Triple Trust Program (a
foreign trust organization). Other trusts were set up at that
time.
Discovering that the foreign trust arrangement, although
adjudicated "legal" by the Ninth Circuit Court of Appeals, was
not "acceptable" to the IRS, the assets of the foreign trust were
transferred (December 31, 1980) to an unincorporated business
trust company named New Life Health Center Company ("NLHC").
The unincorporated business trust is a legal contract under the
Common Law of Arizona state (a Republic, by Law).
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 4 of 17
Little did they know that, during the subsequent Grand Jury
investigation of Karl Dahlstrom et al., there would be an "ex
parte" meeting with the office of the United States Attorney for
the Western District of Washington, and the Office of the Tax
Division of the U.S. Department of Justice. A "Disclosure Order"
was issued by District Judge Barbara Rothstein purporting to find
a "particularized need" for breach of Grand Jury secrecy on the
part of the IRS.
The Grand Jury materials (especially the membership list of
the ALA) was provided directly to the IRS for use in civil audit
investigations of most, if not all, of the members of the
Association. It was so stated in a document obtained through the
Freedom of Information Act that, armed with the membership list,
"the IRS could proceed with maximum impact."
As a result of this egregious violation of the Fourth
Amendment, a suit was filed in Federal District Court (a Bivens
type Action) and summarily defeated at this level. The Judge
ruled that the government has "sovereign immunity." In short,
they can do any damn thing they want to do, and the Court will
uphold their illegal activities.
As early as 1981, Burns and Deal were subjected to intense
audits for the years 1978, 1979, and 1980. Subsequent to these
audits, all legitimate deductions such as wages and utilities
were disallowed from the returns filed by Burns, Deal and NLHC.
A plethora of 90-day letters was issued on Burns, Deal and NLHC
(some intentionally sent to wrong addresses) the alleged
deficiencies of which totaled, for all parties, $3,819,479.42!
The total adjusted gross income for Burns, Deal and NLHC for the
same period of time was $596,225.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 5 of 17
Prior to the issuance of the Notices of Deficiency, Burns
was personally confronted by "agents" of the IRS who attempted to
intimidate him with stories of a criminal prosecution which
"they" had brought against some of the ALA members. The "agents"
attempted to indicate to Burns that they "had the goods" on all
members of the ALA and that, unless he (Burns) "cooperated" by
agreeing to accept their proposed deficiency, Burns would be
subjected to criminal prosecution and civil seizure, not to
mention future harassment. Burns is now convinced that this
conduct on the part of these "agents" of the IRS was extortion.
Burns informed the "agents" that the atmosphere of coercion
which they exuded required him to stand on his Fifth Amendment
Immunity against self-incrimination. Apparently angered by this
response, and desiring to punish Burns, the "agents" proceeded to
issue Notices of Deficiencies in amounts which had no reasonable
basis in either law or fact and were at best arbitrary, capri-
cious, and unreasonable. The facts which they presented to Burns
about his personal and financial affairs could have come only
from the records illegally gleaned from the aforementioned Grand
Jury records. Looking back, it is obvious that the government
agents were committing acts of extortion and conspiracy to
violate the fundamental rights of Burns, Deal and NLHC.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 6 of 17
At this time Burns and Deal were advised as to their
extremely limited choices: either (1) pay the deficiencies and
sue in Federal District Court, or (2) apply to the United States
Tax Court. In both cases, they recognized that the legal system
had gone full circle and that they were GUILTY and must carry the
burden of proving their innocence. Certainly, this is a defect
in the legal justice system that must be remedied in the future.
It was during the 1981 audit period that Burns and Deal
recognized what was happening and attempted to settle the only
real issue of the triple trust arrangement, and that was the
so-called "contingent liability." Burns attempted to settle with
the U.S. Attorney, Robert A. Johnson ... reverse the distribution
and compute the tax, penalties, and interest, and "we'll pay it."
Johnson, however, refused to settle the issue and, in fact,
stated that "This is not an issue of money (Dr. Burns), this is a
power issue. We intent on putting you and your Company out of
business to make you an example." Neil T. Nordbrock was there to
witness this statement by Robert A. Johnson. It seemed that the
entire motive was to crush the membership of the ALA, as well as
Burns and Deal, no matter what it took or what it cost, which,
for the most part, they have accomplished.
Many times both Burns and Deal, and their attorneys, have
attempted to settle the case. In fact, Jim Everett has settled
many cases (such as ours) with Bernie Knight (U.S. Attorney in
Washington, D.C.). In an attempt to settle, Everett was told in
no uncertain terms that "the government has no intention to
settle with those tax protestors," or words to that effect. They
have been met with the same negative attitude even after 15 years
of litigation.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 7 of 17
The only choice was to petition Tax Court. The date set was
for November 2, 1987. Prior to this date, the IRS conducted
audits for the calendar years of 1980, through and including
1986. Burns and Deal were subjected to weeks of intensive
interrogation (inquisition?) with respect to the legitimacy of
deductions. No matter what justification was argued, the end
result was that most deductions were summarily denied, thereby
creating as large a tax deficiency as possible.
As the tax court date approached, it was determined that
Burns and Deal would not get relief in that forum. In fact, the
burden was too great to overcome, especially in light of the fact
that they were being "tried" by a "Special" Judge (Payjak) who
was there solely for their case.
At that time, the choice was made to file a personal Chapter
11 and thereby stay the Tax Court proceedings. Little did they
know that their attorney, John Standifer, had notified Robert A.
Johnson (the U.S. Attorney) of their intentions (thereby
violating the Attorney/Client privilege). The Bankruptcy
attorney, Ralph Seifelt, was confronted by several U.S. Attorneys
when he went to file the petition. They attempted physically to
prevent Seifelt from filing the petitions. The date for the
filing was on or about October 28, 1987. Seifelt successfully
filed the petitions; however, the government rousted the
bankruptcy judge away from a weekend vacation and demanded that
the judge "lift the stay," which he did.
In Tax Court, Standifer stipulated to the Court that Burns
owed approximately $293,000, an amount of which Burns had no
knowledge whatsoever. In fact, Burns did not discover that
Standifer had done so until about a year later, when he was going
through some old files given to him by Standifer. When asked why
he entered the stipulated figure, Standifer replied that he felt
that this was his way of "remaining in good faith with the
government." Standifer also went on to say that "$293,000 was
better than millions of dollars." It turned out that Standifer
was our worst nightmare.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 8 of 17
Burns and Deal then proceeded to litigate in Bankruptcy
Chapter 11. The government moved for more audits, which they
were granted, and Seifelt moved for discovery on their part. The
court granted the motion; the government refused to comply with
discovery; and the court never enforced it. Therefore, there
was no way of determining the true tax liability. So much for
justice. Burns and Deal were forced out of Chapter 11 protection
on or about February 10, 1992, due to a pending conversion.
Through the use of Freedom of Information Act requests,
Burns and Deal obtained certain information substantiating the
fraud that had been perpetrated upon them. A suit was prepared
by our attorney, Jim Everett, and filed against the IRS on
February 11, 1993, alleging, among other violations, fraud,
embezzlement and numerous Constitutional violations. See case
#CIV 93-0301 PHX (PGR). After spending in excess of $20,000 to
prepare the case, the Judge granted summary judgment for the
Defendants without so much as oral arguments or, for that matter,
any discovery. In short, the Judge did not want to be bothered.
So much for equity in the courts.
The only choice at this point was to re-file into Bankruptcy
Court. Deal filed Chapter 11 (and remains there) and Burns filed
Chapter 7. Burns liquidated over a half a million dollars of
debt, most of which he never owed. NLHC was forced into a
Chapter 11 (June 13, 1993) when it was learned that the
Collections Branch was now treating NLHC as a "hidden" asset of
Burns. Rather than let collections ruin the business and give
Burns and Deal a chance to argue the issue of ownership, the
trust had no choice but to file for protection. After
approximately 13 months of time, the government still had not
entered a proof of claim.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 9 of 17
After the Judge granted NLHC a bar date, the government
moved for a 90-day extension, during which time they could
"conduct their investigation," despite the fact that they had
plenty of time to do so. The extension was granted. It was at
that hearing that the Judge ordered the United States (Rachel
Zepeda) to file a Proof of Claim ON OR BEFORE May 23, 1994 at
5:00 pm the terms of which appears in the transcript. The Judge
was emphatic about his order and even went so far as to tell Mr.
Everett to proceed with a Motion to Dismiss if the United States
did not provide a timely proof of claim.
The U.S. Attorney ordered all books and records pertaining
to NLHC for the years of 1989 and through and including 1993.
Burns and Deal were then put through another series of
interrogations and depositions costing a great deal of time and
money, not to mention additional mental anguish and frustration.
The U.S. Attorney failed to meet the bar date and exceeded that
court-ordered date by ten (10) days. Jim Everett proceeded
forward with his Motion, per the Judge's ruling.
At the hearing, the Judge asked Ms. Zepeda why she was late
in filing the proof of claim. Her answer was, "We do this all
the time your Honor, and we are very busy" (or words to that
effect). The judge, however, was not concerned about the
government's not meeting the time for filing, and granted the
extension based on "excusable neglect." Everett then filed a
Motion for Reconsideration, which was granted. At this time,
Everett introduced a plethora of law on point. The government's
response was not only weak, it was also a sorry piece of legal
work. It is no wonder that these people go to work for the
government; they could not make it on the outside.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 10 of 17
Several weeks later, the Judge ruled for the second time
against Burns/Deal and NLHC with a remark, "No one has been
injured." One would wonder what it takes for a judge to be at
all concerned that someone has "been injured." We then filed an
appeal which was assigned to Judge Jim McNamee. On July 14th,
without a great deal of surprise, he sustained the bankruptcy's
judge's ruling. An appeal to the Ninth Circuit was filed, and it
is still pending.
Should we fail all of the above, we have two choices: (1)
file an adversary proceeding which, in effect, is another law
suit against the IRS, with the purpose of forcing the IRS to
prove ownership of the Company. This would (of course) cost a
great deal of legal fees and time. Or (2) we can hire
independent business appraisers to evaluate the value of the
business on a shut-down basis.
The latter option we have done. We hired two independent
appraisers (the cost of which was approximately $7,000) to
evaluate the business as of June 13, 1993. The value at that
time, according to these appraisers, was approximately $111,000.
We then can choose to stipulate as to ownership, introducing the
value of the business as a settlement figure, and offer to pay
this amount as a settlement.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 11 of 17
The only thing the government can move to do is to object.
The Judge should either sustain the objection, or overrule it,
and accept the settlement figure. The problem is this: can this
amount be paid? And, if the government forces the Company into
auction, this could result in a loss of the assets of a business
Burns has guided for more than 25 years.
Following the "investigation" which occurred during the 90-
day extension, Martineau of the IRS issued a 30-day letter dated
June 8, 1995, disallowing certain (legitimate) business
deductions for the taxable years of 1992 and 1993 (NLHC returns),
resulting in additional taxes of over $60,000!!! This latest
move leads one to believe that there is nothing stopping the IRS
from further disallowing business deductions for the years 1994,
1995, and so on, ad nauseam. These actions will eventually
collapse the New Life Health Center and, therefore, a long-
standing business which has been a benefit to the community, with
an excellent reputation. But what do they care?
Update
On March 5, 1996, a Grand Jury subpoena was served on New
Life Health Center to deliver all books and records for calendar
years 1990 thru 1995 to the Grand Jury on March 27, 1996, 9:00
a.m. This subpoena was served upon Richard Rineer, Manager of
one of New Life's retail stores located at 4841 E. Speedway in
Tucson, Arizona state. The subpoena was defective in many ways.
Counsel for the company (Paul Andrew, Mitchell, B.A., M.S.)
generated a Privileged Communication which was submitted to the
Grand Jury Foreperson by way of registered U.S. Mail, restricted
delivery and return receipt both requested. This method of
mailing is the most restrictive, and only the Grand Jury
Foreperson could have signed for it. As it turned out, by way of
a U.S. Postal investigation, the Assistant U.S. Attorney, Robert
L. Miskell, appears to have intercepted the mail, and the Grand
Jury never received Counsel's Privileged Communication.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 12 of 17
Of course, Mr. Miskell has alleged that he had never
received the Privileged Communication until April 18, 1996.
Coincidentally, that was the date that the Postal investigation
was completed, and also the date that Miskell would have become
aware that the Postal investigation was underway. Therefore, a
charge of perjury was filed by Counsel.
Further, it appears that Mr. Miskell is also guilty of mail
fraud, jury tampering, contempt of court, and obstruction of
justice. All of these charges have been briefed and submitted to
a list of participants, including District Judge John M. Roll.
Subsequent to a hearing on an Order to Show Cause why New
Life Health Center and/or its General Manager should not be held
in contempt of court, Judge John M. Roll served upon Dr. Burns an
order to appear in front of the Grand Jury on May 22, 1996, at
9:10 a.m., "with copies of the requested document" [sic].
Burns did appear on that date and attempted to deliver to
the Grand Jury copies of the Company's Notice of Offer
Withdrawal, Petition for Clarification, for Reconsideration, for
Writ of Mandamus, and for Orders to Show Cause, with Exhibits,
all of which was also mailed to the Grand Jury but never reached
them. Now Mr. Miskell has put in front of Judge Roll an "order
to strike" certain crucial pleadings, based on the absence of
licensed counsel. Reply briefs are being prepared.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 13 of 17
It is obvious to us that, since the civil side of the IRS
pursuit is stymied by the bankruptcy, they have decided to
generate a criminal case. This action further supports the
original statement promulgated by Robert A. Johnson, wherein he
stated that it was the goal of the "Service" to put Burns, Deal
and New Life out of business and thereby make an example of them.
Conclusions
It has been our experience that the attitude of the IRS and
DOJ is that whatever People earn really belongs to them. They
will tell you how much you can retain. These agencies do not
adhere to any of the laws enacted by Congress. They can violate
any law or Constitutional provision and be supported by the
Courts, Barbara Rothstein notwithstanding, her eminence who
"prosecuted" the Karl Dahlstrom case in Washington state.
History is replete with the abuses which have befallen
hundreds of thousands of decent, hard-working, God-fearing
people, attempting to play by the rules on a non-level playing
field, with the United States charging downhill. If Burns and
Deal had ever realized what would happen to them by entering into
any program for building an estate that is NOT approved by the
federal government, they certainly would not have done so.
Since the original audit, they have been billed approxi-
mately $500,000 in legal fees to defend themselves against these
unreasonable people. It is incomprehensible how much money the
government has spent on this case. It is easily in excess of
whatever they could possibly realize in any kind of settlement.
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 14 of 17
Had this argument been between two private parties, it would
have been settled in a heartbeat. However, it seems that, when
the government targets someone, it will go to any lengths,
including the commission of serious felonies like mail fraud,
perjury, obstruction of justice, and jury tampering, despite the
obvious costs and serious damages to the Citizens. There is no
question that both Burns and Deal desperately want to settle this
case and get on with their lives. We hereby reserve all our
Rights without prejudice.
We witness each other, and further Affiants sayeth naught.
Executed on June 7, 1996
/s/ Eugene A. Burns /s/ Linda H. Burns
Dr. Eugene A. Burns Mrs. Linda H. Burns
Citizen of Arizona state Citizen of Arizona state
/s/ Sheldon C. Deal /s/ Cindy M. Deal
Dr. Sheldon C. Deal Mrs. Cindy M. Deal
Citizen of Arizona state Citizen of Arizona state
Exhibits available upon request.
All Rights Reserved Without Prejudice
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 15 of 17
PROOF OF SERVICE
I, Linda H. Burns, hereby certify, under penalty of perjury,
under the laws of the United States of America, without the
"United States", that I am at least 18 years of age and a Citizen
of one of the United States of America, that I am not currently a
Party to this action, and that I personally served the following
document:
JOINT AFFIDAVIT OF
DR. AND MRS. EUGENE BURNS AND
DR. AND MRS. SHELDON DEAL
by placing said document with exhibits in first class U.S. Mail,
with postage prepaid and properly addressed to the following
individuals:
ROBERT L. MISKELL John M. Roll
Acapulco Building, Suite 8310 U.S. District Court
110 South Church Avenue 55 E. Broadway
Tucson, Arizona Tucson, Arizona
JANET NAPOLITANO Clerk
Acapulco Building, Suite 8310 U.S. District Court
110 South Church Avenue 55 E. Broadway
Tucson, Arizona Tucson, Arizona
Grand Jury Foreperson Postmaster
In re: New Life Health Center Co. U.S. Post Office
55 E. Broadway Downtown Station
Tucson, Arizona Tucson, Arizona
Judge Alex Kozinski Evangelina Cardenas
Ninth Circuit Court of Appeals "Internal Revenue Service"
125 S. Grand Avenue, Suite 200 300 West Congress
Pasadena, California Tucson, Arizona
Attorney General Solicitor General
Department of Justice Department of Justice
10th and Constitution, N.W. ! 10th and Constitution, N.W. !
Washington, D.C. Washington, D.C.
Dated: June 7, 1996
/s/ Linda Burns
________________________________________
Linda H. Burns, Citizen of Arizona state
All Rights Reserved without Prejudice
Joint Affidavit of Dr./Mrs. Burns, Dr./Mrs. Deal:
Page 17 of 17
# # #
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In Re Grand Jury Subpoena