We are committed to closing California's $6.5 billion tax gap, defined as the difference between tax that is owed and tax that is paid. Our special agents work cooperatively with law enforcement agencies throughout California to uncover illegal behaviors that contribute to the tax gap. These include underreporting income, overstating deductions, failing to file returns, failing to pay taxes due, and making illegal cash payments to employees. Tax fraud is not a victimless crime. You can report suspected tax fraud by calling FTB at (800) 540-3453.
The principal mission of our criminal investigation program is to identify, investigate, and effect prosecution of tax evasion, fraud, and employee misconduct; encourage compliance with the California income tax laws, and maintain the public trust through publicity. Special investigation agents have Peace Officer law enforcement status. In carrying out the criminal investigation process they conduct interviews, trace money, execute search warrants and felony arrest warrants, and testify in court trials.
As of October 31, 2006, the criminal program has successfully prosecuted 54 individuals, with the courts awarding $3,073,244 in restitution. Cases prosecuted last month are described below.
Parkers stand trial on pot charges
Reprinted by special permission of the Ukiah Daily Journal
Mendocino Superior Court Judge David Nelson found Thursday there is sufficient evidence to hold Memo and Mark Parker for trial on some of the charges filed against them in connection with a search warrant served on two houses on Gardens Avenue. Memo Parker will stand trial on charges of possession of marijuana for sale, cultivation of marijuana for sale, management of a location for the production of a controlled substance, possession of concentrated cannabis and one count of failure to file a tax return.
His brother, Mark Parker, will stand trial on charges of possession of marijuana for sale, cultivation of marijuana for sale, and management of a location for the production of a controlled substance.
"The amount of marijuana here seems to be much higher than needed for medical use," Nelson said.
During the service of a search warrant October 16, law enforcement officers seized more than 400 marijuana plants and 170 pounds of processed marijuana from houses owned by Memo Parker at 130 and 106 Gardens Avenue.
The brothers' attorneys, Edie Lerman representing Mark Parker, and David Nick representing Memo Parker, both contend the brothers were growing marijuana for medical use.
Team commander Rusty Noe testified that by his estimation, the combined weight of processed and growing marijuana was more than necessary for medical use. "What we discovered was excessive," Noe said.
Nick questioned Noe's estimation of how much marijuana a given plant would have produced. Noe testified that he did not look at every single plant and that he did not harvest any of the plants to see if his estimations were correct.
Nick also entered into evidence a document signed by Dr. Jeffrey Y. Hergenrather that said Memo Parker's medical condition allowed him the right to possess more marijuana than is permissible under state law.
Lerman said Mark Parker had a similar document but did not produce it for the court. In Mendocino County, patients are allowed to possess roughly two pounds of marijuana for medical purposes, and Mendocino County allows patients to grow a 10-by-10 foot canopy of marijuana for medical purposes.
Noe also testified that 32 pounds of processed marijuana in bags was seized from one of the houses on Gardens Avenue. Noe said the marijuana had been separated in bags of differing weights ranging from two pounds to one ounce.
Noe testified he did not observe Memo or Mark Parker sell marijuana to anyone and did not investigate who they might have sold marijuana to.
As evidence of failure to file tax returns, Deputy District Attorney Brian Newman presented copies of documents from the state Franchise Tax Board, which showed no record of a tax return filed by Memo Parker between 2001 and 2005.
Nick said the court could not infer from that evidence that Memo Parker had fraudulently failed to file a tax return when it is possible that he simply did not make any money during those years.
Newman cited the $22,000 seized from Memo Parker's bank account and his ownership of two houses and a 1997 BMW sedan and a 1999 GMC as evidence of an income. Newman also cited evidence gained from an investigation of utility bills for 130 Gardens Avenue as evidence of a significant and unreported income.
Ukiah Police Sgt. Justin Wyatt testified that, between August 2004 and September 2006, those monthly bills were regularly in excess of $1,000. Nick questioned the accuracy of those documents.
Nelson said the court could infer an income for 2005 and hold Memo Parker to answer on charges for that year, but that there was not sufficient evidence to infer the same for previous years.
Memo and Mark Parker were scheduled to be arraigned on the listed charges at 10 a.m., November 9.