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Group calls for IRS probe
McDonnells, Cuccinelli are targets
Wednesday, July 24, 2013
WASHINGTON Business Wire— The Citizens for Responsibility and Ethics in Washington (CREW) on Tuesday called on the Internal Revenue Service (IRS) to investigate whether Governor Robert McDonnell, R-Va., his wife, Maureen McDonnell, and Attorney General Kenneth Cuccinelli, R-Va. violated tax law by failing to report and pay taxes on income received from Jonnie R. Williams Sr. and Star Scientific, Inc.
CREW Executive Director Melanie Sloan stated, “Their tax returns may turn out to be the McDonnells’ and Attorney General Cuccinelli’s Achilles’ heels. Even if prosecutors have a tough row to hoe proving willful and knowing violations of gift and bribery laws, tax violations may be easier to pursue.”
In the past two years, Gov. McDonnell and his wife have received at least $166,150 in payments, goods and services from Williams, a trust he controls, and his company. At the same time, the McDonnells repeatedly promoted Anatabloc, a dietary supplement critical to Star Scientific’s success. Additionally, Maureen McDonnell hosted a luncheon at the governor’s mansion to launch Anatabloc and touted it to potential investors.
Since 2009, Attorney General Cuccinelli has received at least $18,893 in goods and services from Williams, including lodging for several family vacations at Williams’s lake house, trips on his private jet and a box of Anatabloc valued at $6,711.
During the same period, the attorney general purchased nearly $20,000 worth of Star Scientific stock, and his office oversaw the investigation and prosecution of the governor’s former chef, who revealed alleged misconduct by Williams and the McDonnells.
The Internal Revenue Code requires taxpayers to report all income received. A gift can only be excluded from income if it was genuinely given out of generosity with no expectation of receiving a benefit in return. Similarly, only a bona fide loan — one the borrower expects to pay back and the lender expects to be repaid — may be excluded from reported income. Failing to report all income and pay taxes can result in fines and criminal liability.
CREW also requested the IRS investigate whether Williams or Star Scientific violated the tax code by failing to report the supposed gifts, failing to pay potential taxes on those gifts, or improperly deducting the gifts as business expenses.
Citizens for Responsibility and Ethics in Washington (CREW) is a nonprofit legal watchdog group dedicated to holding public officials accountable for their actions. For more information, visit www.citizensforethics.org or contact David Merchant at (202) 408-5565 or dmerchantcitizensforethics.org.