Things Get Complicated for Texas Lawyer

DALLAS (CN) - An attorney representing a Dallas county commissioner in a federal corruption investigation owes $5.3 million in taxes and penalties dating back to 1984, federal prosecutors say.

The United States sued Dallas attorney John Carney, his mother Norma Carney and Plainscapital Bank.

Carney is representing Dallas County Commissioner John Wiley Price in a civil case brought by the FBI.

In its complaint against Carney, filed Friday, the government claims: "He has failed to pay his federal personal and business tax debts for decades."

Uncle Sam claims the unpaid taxes date back to 1984, though "According to his Wells Fargo Bank business account application, the annual gross sales of his law firm is $5,000,000."

The 15-page complaint accuses Carney of a "pattern of tax avoidance."

Carney employs 27 people and has received dozens of federal tax lien notices since 2003, the government says. In 1991, it determined that a pair of Carney's partnerships were tax shelters that "lacked economic substance."

Prosecutors ask to foreclose on an expensive North Dallas home titled to the Hatchett Trust, of which Carney's mother is trustee.

The government calls it a "sham" trust that Carney established and controls.

"This residence has a county tax-assessed value of over $819,850, and is 5,390 square feet, one and a half stories, and has a pool," the complaint states. "However, Carney exercises full dominion and control over this residence, and he makes all payments on the Plains Capital Bank mortgage encumbering the residence. The utility bills for the Strait Lane Residence are mailed to Carney at his law office, and Carney pays these bills. Carney also pays the ad valorem taxes pertaining to the Strait Lane Residence, and all other expenses pertaining to the residence."

More than $460,000 was seized from Carney's client John Wiley Price in June 2011, in a continuing federal corruption investigation, according to a forfeiture complaint filed in May.

In a 62-page affidavit, FBI agent Donald Sherman said the money came from crimes, including money laundering, bankruptcy fraud, bribery of public officials and witnesses, aiding and abetting; theft or bribery concerning programs receiving federal funds, and interference with commerce by threats or violence.

"Price and others have conspired for Price to accumulate assets far beyond his disclosed means to save and/or pay for same since at least in or about 1995, the total value and nature of which cannot be accounted for but for the undisclosed and illegal income detailed below," the affidavit states.

Sherman accused Price and others of structuring cash income to avoid currency transaction reports at banks. The alleged co-conspirators have also commingled legitimate and illegal income to hide money-laundering operations, according to the complaint. Price has not been charged with any crime.

In its complaint against Carney, the government wants his debts reduced to judgment, a determination that the trust is his alter ego, and foreclosure of the home.

Follow @davejourno

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit