Tax-Fraud Conviction of Chicago Politician Upheld

CHICAGO (CN) - A former Chicago alderman who financed his gambling habit with campaign funds that he never reported on his tax returns remains guilty of fraud, the 7th Circuit ruled.

William Beavers, now 79, had been in his third year as Cook County commissioner, after a 23-year stint as Chicago alderman, when federal agents informed him in April 2009 of an investigation into his conversion of campaign funds.

Citizens for Beavers reported that it paid Beavers $56,149 in 2005, but Beavers only reported $43,000 of this money on his tax return.

The next year, Beavers did not report the $68,763 that he withdrew from the campaign fundraising group's bank account to increase his pension annuity.

Beavers also wrote himself more than 100 checks totaling $226,300 from three campaign-committee accounts, often using those funds to finance gambling trips to Horseshoe Casino in Indiana.

In amended tax returns for 2007 and 2008, the former alderman reported an extra $20,000 in additional income for each year, and he attempted to repay his campaign funds for his $68,000 withdrawal.

A jury nevertheless ultimately convicted Beavers for making false statements on his tax returns, and corruptly obstructing the Internal Revenue Service's investigation.

He was sentenced last year to six months in prison and ordered to pay $31,000 in restitution, plus a $10,000 fine.

The 7th Circuit affirmed that conviction and sentence Monday, one month after the former alderman's prison term had concluded.

It had been proper for the trial court to exclude evidence of remedial actions because Beavers could not "establish that each remedial action was relevant to his state of mind at the time he filed the original tax returns," Judge Joel Flaum wrote for the three-judge panel.

"In fact, his theory of defense is at odds with his argument that the re-medial evidence was relevant. Beavers' argument in defense (which he maintains on appeal) was that all of the transfers from his campaign committees were loans, not income," the 26-page opinion continues (parentheses in original). "Thus, evidence that Beavers declared some of the campaign-fund transfers as income on his amended tax returns after he was under investigation has little bearing on whether he considered the transfers to be loans at the time he took the funds."

The trial judge had also correctly instructed the jury that the transfer of money is only a loan if the parties intended it as such at the time of the transfer, according to the ruling, which also supported the limits on how the jury could consider the testimony of Beavers' tax expert and of the government's expert witness in deciding whether a particular check is a loan, or income.

Beavers maintains that the government prosecuted him only because he refused to wear a wire on Cook County Commissioner John Daley, the brother of former Mayor Richard Daley, the Chicago Tribune reported.

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