Ruling in the tax case of convicted D.C. drug dealer Cornell Mert Jones, a federal appeals court said Jones might not be facing a $16.5 million tax bill, plus interest and penalties, if only he'd kept records of his business.
Written records of drug transactions are anathema to drug dealers because if they get into certain hands -- those of law enforcement agents -- the information can be and is used against them in proving their illegal activities.
A three-judge panel of the 10th U.S. Circuit Court of Appeals has turned down Jones's challenge of his IRS bill on the grounds that, while the tax court's estimate that Jones made $33 million from drug sales in 1985 was "almost certain" to be "inaccurate," Jones had made no attempt to show what the real figure was.
"Rather than offering any explanation or other evidence concerning the amount of drug-related income he received, Jones merely attempted to prove that he received no income from drug sales," the court wrote in an opinion handed down in May and received by the U.S. Tax Court here earlier this month. "His attempt to distance himself from illegal income failed miserably."
Jones, 33, described by law enforcement authorities as the "top dog" of the cocaine trade along Hanover Place NW, was sentenced to a 9- to 27-year prison term in 1986 on a drug conspiracy charge after he pleaded guilty to trying to purchase a kilogram of cocaine from an undercover D.C. officer.
The Internal Revenue Service computed Jones's tax bill on evidence that 20 kilograms of cocaine a week were sold on Hanover Place, yielding an estimated income for 10 months of $66 million. Then, to be "reasonable and conservative," the IRS halved that amount.
The tax court has yet to set the penalties against Jones for failing to report the income, but the usual rate is 25 percent plus interest.
It's unclear whether the government will ever get any of the money. Police and prosecutors seized most of Jones's assets that they could identify. And he'll be in jail for at least four more years.
But the IRS will be waiting.