BY JIM DOOLEY – A Honolulu man who has deluged federal and state courts with so many voluminous filings that he was dubbed a “vexatious litigant” will go on criminal trial in California next month for federal charges including fraud, blackmail and witness tampering.

Eric A. Lighter, 59, was first indicted in the case with co-defendant Samuel S. Fung, 56, an Oregon tax preparer who pleaded guilty yesterday in U.S. District Court in San Jose.

According to a news release from the U.S. Justice Department, Fung obstructed IRS tax collections by establishing “fictitious business names” which he and others used “to conceal their assets and income from the IRS.”

Fung “admitted to preparing at least 65 false fraudulent income tax returns for taxpayers and entities for the tax years 1998 through 2002,” said the office of Melinda Haag, U.S. Attorney in Northern California.

“Fung referred clients to Lighter and he and Lighter purported to fight the IRS on behalf of clients,” according to federal authorities.

“Lighter offered to conduct financial transactions to hide assets from the IRS for his clients. Lighter also prepared false documents, including fraudulently encumbering client assets,” the government said.

Lighter has pleaded not guilty and his trial is scheduled to begin in San Jose October 4.

Honolulu blogger Ian Lind, a former Honolulu Star Bulletin reporter, has written extensively about Lighter.

http://archives.starbulletin.com/2001/01/08/news/story4.html

http://ilind.net/misc%20/2008/fraud-2008-03-12.html

In the California case, prosecutors said in court papers filed this month that evidence they intend to introduce against Lighter includes “fraudulent conveyance and sham sales of properties.”

Other evidence would include the fact that the U.S. District court in Honolulu designated Lighter to be a “vexatious litigant,” the government said.

Prosecutors also noted that Lighter pleaded no contest to a second-degree theft charge here in 2003, although that case was later dismissed after Lighter stayed out of trouble with the law for 18 months.

According to the government, the IRS began investigating Fung in 1999.

“As early as June of 2002, Defendant Lighter joined the conspiracy to impede and impair the assessment and collection of federal income taxes,” prosecutors said in a pretrial filing.

Lighter allegedly promised clients “that he could hide their assets in order to protect the clients from the assessment and collection of taxes,” according to the government.

“Defendants Fung and Lighter continued their conspiracy to defraud the United States up to and through March of 2006,” prosecutors charged.

The blackmail and witness tampering charges arise from the pairs’ alleged attempts to convince a former client “to testify favorably for Defendant Fung in his criminal prosecution,and to drop a civil lawsuit … filed against Defendant Lighter,” according to filings.

The government has also filed a motion seeking to prevent Lighter from introducing evidence concerning his “beliefs” about federal tax laws.

The beliefs have been contained in pleadings filed in the criminal case and other litigation and are “incorrect statements of the law” that could lead to “juror confusion,” the government said.

Among these beliefs, the government said, are:

  • That the Internal Revenue laws and/or the Sixteenth Amendment to the United States Constitution are unconstitutional and invalid, such that the Internal Revenue Service (“IRS”) lacks jurisdiction.
  • That business receipts, salaries, wages, or commissions are not income or that the Internal Revenue laws and/or the Sixteenth Amendment do not allow for the direct taxation of these items.
  • That the filing of income tax returns is voluntary and not mandatory.
  • That the taxpayers who the defendants are alleged to have assisted are not subject to federal income taxes because they are “sovereign” citizens of a particular state.

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Jim Dooley joined the Hawaii Reporter staff as an investigative reporter in October 2010. Before that, he has worked as a print and television reporter in Hawaii since 1973, beginning as a wire service reporter with United Press International. He joined Honolulu Advertiser in 1974, working as general assignment and City Hall reporter until 1978. In 1978, he moved to full-time investigative reporting in for The Advertiser; he joined KITV news in 1996 as investigative reporter. Jim returned to Advertiser 2001, working as investigative reporter and court reporter until 2010. Reach him at Jim@hawaiireporter.com