KNOXVILLE - A federal judge has denied former longtime state Rep. Joe Armstrong’s request to toss his felony tax evasion conviction or at least grant him a new trial.
In an opinion issued Wednesday, Senior U.S. District Judge Thomas Phillips said the 28-year veteran lawmaker admitted during testimony that he did not include the profit he made from the sale of tax stamps on his 2008 income tax return.
A jury in August found the long-time East Knoxville Democrat guilty of filing a false and fraudulent tax return, but declined to convict him on two other charges - conspiracy to defraud the United States, and attempting to evade and defeat taxes.
During his week-long trial, the government contended that the 14-term state representative used his position to buy state cigarette tax stamps before an increase was passed by the state Legislature. He then sold them for a profit – about $321,000 – but failed to report tens of thousands of dollars of the income on his 2008 tax returns, prosecutors said.
The government said Armstrong worked in conjunction with his Kentucky-based accountant to hide the money from the IRS by funneling it through one of his accountant’s businesses.
The accountant, Charles Stivers, had pleaded guilty for conspiracy to defraud the United States and prosecutors offered him leniency to testify against Armstrong.
Armstrong’s defense team appealed, saying the jury’s verdict was “inconsistent.”
Lawyer Gregory P. Isaacs at the time said the jury shouldn’t have found him guilty of filing a false tax return if it acquitted him on attempting to evade and defeat taxes.
Judge Phillips disagreed.
“(Armstrong) admitted that the profit of approximately $330,000 was income to him, it was not included on his 2008 income tax return and it should have been,” the judge wrote in his order. “He acknowledged that he could not report his income on the tax return of another person. Thus, the jury was presented with the defendant’s own testimony that the tax stamp profit was his income and he did not report it.”
Armstrong retired shortly after his conviction.
His sentencing is set for Nov. 30.
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