The Department of Justice on Friday sued Roger Stone, the loyal former advisor to ex-President Donald Trump, alleging he and his wife owe nearly $2 million in unpaid federal taxes and other fees.
The lawsuit accuses Stone and Nydia Stone of using an “alter ego” company in an attempt to “shield their personal income from enforced collection and fund a lavish lifestyle.”
The civil complaint also alleges the Stones “intended to defraud the United States” through a fraudulent transfer of money used to buy their house.
Stone, 68, a longtime Republican political operative, was pardoned by Trump in December after being convicted of lying to Congress.
The DOJ's complaint, filed in southern Florida federal court, alleges Stone and his wife underpaid their federal income taxes for five straight years, from 2007 and 2011. The Stones owe $1,590,361.89, including interest and late-payment penalties, according to the complaint.
The lawsuit also alleges Stone did not pay his full tax bill in 2018, when he filed separately from his spouse. He owes $407,036.84 in income taxes, interest and penalties for that year, the complaint says.
“Despite notice and demand for payment, Roger and Nydia Stone have failed and refused to pay the entire amount of the liabilities they owe,” the DOJ alleges.
Stone did not immediately respond to an email requesting comment on the lawsuit.
The complaint alleges that the Stones “evaded and frustrated the IRS's collection efforts” through their use of a Delaware limited liability company called Drake Ventures. The company is “dominated and controlled” by the family “to such an extent that it does not exist as an independent entity,” the DOJ alleges.
Drake Ventures has no website or phone number, all of its members are part of Stone's family and its address is the same as the Stones' home in Fort Lauderdale, Florida, the complaint says.
“The Stones used Drake Ventures' bank accounts to pay a substantial amount of their personal expenses, including groceries, dentist bills, spas, salons, clothing and restaurant expenses,” according to the complaint.
They also paid more than $500,000 of their personal tax liabilities through Drake Ventures' bank accounts in 2018 and 2019, and they used the company to pay Stone's associates and relatives without providing the right paperwork, the DOJ alleges.
“The Stones used Drake Ventures for an improper purpose and harm to the United States,” according to the complaint. “They used Drake Ventures to receive payment that are payable to Roger Stone personally, pay their personal expenses, shield their assets, and avoid reporting taxable income to the IRS.”
The DOJ's lawsuit also accuses the Stones of fraudulently conveying their house through a Florida revocable trust they created called the Bertran Trust.
The Stones had struck a deal with the IRS in May 2017 to pay $19,485 per month toward their unpaid taxes, the complaint says.
After Stone was indicted in January 2019, his family created the Bertran Trust and bought their house in its name, using money they had transferred into that entity from Drake Ventures to make a $140,000 down payment.
In March 2019, the Stones failed to make their monthly payment to the IRS, prompting the agency to scrap the installment plan.
“The Stones intended to defraud the United States by maintaining their assets in Drake Ventures' accounts, which they completely controlled, and using these assets to purchase the Stone Residence in the name of the Bertran Trust,” the complaint alleges.
The DOJ says “numerous badges of fraud” marked the purchase. The complaint alleges the Stones were insolvent and “unable to pay to their debt;” facing the threat of litigation; and anticipating that the IRS would “resort to enforced collection of their unpaid tax liabilities once they defaulted on their monthly installment payments.”
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