Taxpayer privacy

Arkansas Business, Jan 7, 2008

Federal prosecutors don't like it, but right now it looks like the Internal Revenue Service is going to have to produce in court the tax records of some Arkansans who did business with the late Little Rock financier M. David Howell.

Richard T. Smith of Hot Springs, the indicted bank investor who cosigned some of Howell's many millions of dollars in promissory notes, has subpoenaed the tax returns and related documents for tax years 1995 onward for Danville banker John Ed Chambers, retired Little Rock physician John. D. McCracken, former Razorback Mickey Cissell of Hot Springs and aircraft dealer Doug Hines of North Little Rock. The subpoena also asks for the tax records of James Cypher of Frisco, Texas.

Smith is charged with one count of defrauding the Federal Deposit Insurance Corp. and three counts of filing false tax returns, all related to his deals with Howell.

The U.S. Attorney's Office in Little Rock, which is prosecuting Smith, tried to have the IRS subpoena quashed on the grounds that taxpayer records are confidential and the taxpayers whose records were subpoenaed are not party to the indictment. But U.S. District Judge G. Thomas Eisele denied the motion, saying the individual names could be redacted.

Interim U.S. Attorney Jane Duke has asked Eisele to reconsider.

Chambers, McCracken, Cissell and Cypher were known participants in Howell's Ponzi-like investment scheme. Bank of America identified all four as having cashed checks Howell wrote on a depleted account shortly before he disappeared from Little Rock in early October 2002. Howell died of a drug overdose in a Beverly Hills hotel later that month.

Smith's trial is scheduled for September, two years after he was indicted.