FAIRBANKS — A Salcha couple has lost a long-running tax battle with the U.S. government, a fight that criminal prosecutors believe spawned a detailed murder conspiracy targeting a judge and an Internal Revenue Service agent.
U.S. District Court Judge Lonny R. Suko ruled on Monday that Lonnie and Karen Vernon are liable for nearly $180,000 in combined unpaid taxes, penalities, interest and government expenses, plus an undetermined amount of additional interest that has accrued since January.
Suko also ruled the government may sell the Vernons’ home on Old Valdez Trail and other possessions to pay off the debt.
The Vernons, who have fought with the IRS since 1999, didn’t deny that federal taxes assessed to them from 1996 and the years 2000 through 2003 went unpaid.
Instead, representing themselves in court, they used a complex argument that the IRS didn’t have the legal authority to collect those taxes. IRS authorization was never properly published in the Federal Register, they said, also claiming they weren’t properly notified of the assessments against them.
Suko rejected the argument, saying there is “no genuine dispute” that the Lonnie Vernon, 55, and Karen Vernon, 65, owe the unpaid taxes and associated fees and interest.
The case had previously been heard by Judge Ralph Beistline, who dismissed the arguments as “frivolous and nonsensical.”
Federal and state prosecutors say the Vernons’ anger toward Beistline and the IRS evolved last year into a murder plot against the judge and a federal tax agent, along with threats toward Beistline’s family.
In March, Lonnie and Karen Vernon were arrested along with three other defendants on weapons and murder conspiracy charges related to that plot. Suko replaced Beistline as the judge in charge of the Vernons’ tax case after the arrests.
Much of the evidence against the defendants is reportedly from hundreds of hours of secret FBI recordings. The defendants had identified targets for murder and kidnapping and had stockpiled weapons for the task, according to charging documents.
The Vernons and the other defendants remain incarcerated while awaiting federal and state trials. The federal charges are scheduled to be heard at trial in early 2012. Their trials on related state charges remain unscheduled, but prosecutors have asked that those cases be addressed after the federal charges have been resolved.
Contact staff writer Jeff Richardson at 459-7518.