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Against the Grain

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Thursday, May 3, 2001

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By Ed Oliver

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Armed revenue agents from the California Franchise Tax Board, with support from local police, raided the home and business of a high-profile tax-resistance activist yesterday morning.

"They are here on a fishing expedition," business owner George "Nick" Jesson told WorldNetDaily on his cell phone from outside his offices at N.T.D. Electronics in Huntington Beach, Calif. Inside, agents were breaking into file cabinets, removing hard drives and boxing up the company's books and records.

Jesson is one of several employers who have directly challenged the IRS and state revenue departments by publicly declaring that they will no longer withhold taxes from their employees and will no longer pay taxes because they say the law does not require them to do so.

The employer tax revolt gained national attention this year with the help of several full-page ads in USA Today -- including one in March featuring an open letter from Jesson to IRS Commissioner Charles Rossotti. The letter referred to a February New York Times article in which reporter David Cay Johnston pointed to Jesson and other employers by name in the context of reporting that the IRS was planning to prosecute "some business owners" for "tax evasion and other crimes."

Also in the letter, Jesson requested a face-to-face meeting with Rossotti or a delegate in order to clear up any misunderstandings about the tax law and regulations that the employers say they are acting on.

Jesson told WorldNetDaily that the raid occurred while he was driving his two boys to school about 8:45 a.m. yesterday morning. His wife Trina was already at the office. At that time, approximately 10 state tax agents went to his home in nearby Fountain Valley and demanded the nanny let them in. The nanny did not open the door for the agents, but asked them for a warrant. She said the tax agents then kicked the door in, terrifying her and her 3-year-old boy. Agents then proceeded to search the house without showing her a warrant, said Jesson.

Meanwhile, a second team of armed tax agents stormed the offices and warehouse of N.T.D. Electronics. Trina Jesson said she was sitting at her desk when three agents burst in and held guns to her head. She said they told her to get away from the desk, cooperate and she wouldn't get hurt. Revenue agents also rounded up warehouse employees at gunpoint, according to Jesson. Everybody was escorted out of the building.

After Nick Jesson arrived, he said he was informed verbally that agents were there because he did not pay his taxes. They presented him with a search warrant. A partial copy of the search warrant faxed by Jessson to WND refers on the front page to a possible felony. Two pages were missing from the warrant, said Jesson, who claimed that is how he received it, and he assumes those pages describe probable cause.

Jesson said he asked Senior Special Agent Edward Wilson what the felony charge was, but that Wilson couldn't tell him.

"I called the district attorney handling the case. I asked him, 'What is the felony charge?' He couldn't tell me," said Jesson.

Jesson said he asked the agents to leave after he noticed the warrant was incorrectly dated with the year 2000. The agents refused to leave, he said, but later told him that they called the judge who said he made a mistake and would correct the date. According to Jesson, a corrected warrant was never delivered.

Describing the armed raid, Deputy District Attorney William Overtoom told WND: "There are no charges. Nobody was arrested. Basically, this is an investigation into possible violations of California criminal law. The search warrant was to get hold of records and other evidence as part of that investigation."

Overtoom said he could not discuss what prompted the investigation. When asked what was on the two missing pages of the search warrant faxed by Jesson, Overtoom said there were actually four search warrants served yesterday at different California locations of properties belonging to Jesson.

"Those pages he's not talking about are descriptions of items and property to be seized at other locations," said Overtoom. "I don't know what he's talking about."

Overtoom added that he could not fax copies of the warrants for another two weeks by law because the searches are still ongoing.

"The search warrant is saying that the judge made a finding that, based upon the affidavit that is not available for public viewing yet, there is probable cause to believe that there are at specific locations certain items which tend to show that a felony has been committed. Basically, a finding of probable cause has been made by the judge," said Overtoom.

The prosecutor said Jesson would learn about the probable cause in due course. Asked about complaints that agents pulled guns and aimed them at the employees, Overtoom said he couldn't comment on that. He also did not comment on complaints about items seized that are not listed on the warrant.

Asked about the incorrect year 2000 date on the warrant, Overtoom said that does not void the search warrant. He then laughed and said he does not think the warrant was issued a year ago. He agreed it is a legal document but said it didn't matter that it was misdated.

Overtoom said they will conduct their investigation, and if they decide there has been a violation, they will go forward with charges and at that time, will be able to comment further.

Jesson denied that there were four locations searched or four search warrants. He said only the house and business were searched. He also reiterated that two pages are missing from the search warrant given to him.

The search warrant seeks financial records pertaining to 1997 through 1999, as well as business records and computer storage devices. Jesson said the IRS refunded him $217,000 in taxes he paid during those years. He said he was seeking a tax refund from the California Franchise Tax Board for those years also. The state wrote him back saying they are investigating whether they could give him the refund, he said.

"We've had no warning ahead of time. We've had no communication from the Franchise Tax Board indicating that we owe them any money," said Jesson.

Jesson speculated that the raid might have been prompted by charges from a disgruntled former employee who he said he caught embezzling from him. He has filed criminal charges against her, he said, and she is under investigation. He also has a civil lawsuit against her, he added.

Jesson was able to enter his office again late last night. He said tax agents seized a weapon and $20,000 in cash from his business, as well as a coin collection from his home, even though the warrant does not authorize taking those items.

A spokesman for the California Franchise Tax Board refused to comment on the raid. Special Agent Wilson did not return calls.