The largest federal false-claims tax-fraud scheme in Missouri history was operated out of a karate studio in a shabby row of businesses in Blue Springs. It was there, say federal prosecutors, that between 2008 and 2011, Gerald Poynter II, also known as "Brother Jerry Love," issued more fraudulent tax forms than black belts.
Poynter and 13 defendants, whom he referred to as "branch managers," are accused of operating a nationwide scheme to defraud the Internal Revenue Service of nearly $100 million.
One of Poynter's branch managers was Shirley Oyer, matriarch of one of Kansas City's most colorful families. Last year, Oyer's son Christopher wrote a book in which he claimed to be the second coming of John the Baptist. Oyer's other son, John Michael, is known for his clashes with Kansas City, Missouri, officials — most recently over custody of his pet chimpanzee, Suco.
A September 2011 indictment alleges that Poynter, 52, and his branch managers would pitch potential clients for his "1099-OID Recoupment Process" at speaking engagements in homes and hotel ballrooms.
"I've made OIDs payable to Spider-Man, Superman," Poynter allegedly bragged in a meeting recorded in Georgia. "You can make it to SpongeBob. You can make it to anybody you want for however much that you want, for $100,000, for example. ... The man's getting paid. They are 24 months behind on processing OIDs. You could make an OID out and slaughter it. Completely fill it out in any way you want to fill it out, booger that thing up bad. No joke."
Of the $96 million in refunds claimed by Poynter's clients, the IRS refunded more than $3.5 million. A notable exception was John Perdido. Court records say the Temecula, California, man received the largest refund of any branch manager: $805,749 in 2009, $118,000 of which, authorities say, he gave to Poynter. He then moved $200,000 to the Philippines, where he bought a home and a car. This past June, Perdido pleaded guilty to his role in the conspiracy.
Oyer, 71, recruited 12 clients for the scheme and helped file 26 fraudulent tax returns, claiming $12.4 million in refunds. The IRS issued just $92,974 of the requested amount.
Federal prosecutors called the plan "nonsensical" when announcing the charges on September 22, 2011. However, variants of the scheme have been around for decades, and the IRS has devoted a lengthy section of its website to explaining frivolous tax arguments like this one.
Here's how the feds say the conspiracy worked: Poynter's so-called branch managers prepared taxes for at least 145 clients, listing each individual's debts — mortgages, loans, car payments, foreclosure records, bank statements, credit-card statements, etc. — on a Form 1099-OID. This was made to look like as though an authentic 1099 had been issued by the clients' creditors, reporting taxable interest income. The branch managers then filed their clients' 1040 tax returns, "fraudulently reporting over-withholding of tax on purported interest income, making them appear due a tax refund," according to the indictment. Their clients then filed for refunds based on the total amount of their debts.
Poynter and his branch managers allegedly split up to $3,000 in upfront fees from each client and an additional 15 percent of any refund issued to the client. Poynter allegedly tried to shield himself from prosecution by asking his clients to forgo paying him a fee and to make "love donations" instead to "Jerry Love Ministries," a company he set up for that purpose. (He also ran Black Belt Tax, as well as a couple of karate dojos.)