PORTLAND — The Department of Justice criminal tax manual calls it "paper terrorism" — filing tax forms that falsely accuse government officials or businesses of suspicious cash transactions.
Seven people have been convicted of charges related to the illegal practice in Oregon in the past year — possibly the largest number convicted in recent years in a handful of states. Most of the cases in the state have been clustered in Southern Oregon.
Steven Dale Kelton, 51, of Central Point was convicted Tuesday of 20 counts of filing a false tax document under penalty of perjury, according to the U.S. Attorney's office in Portland.
Prosecutors said Kelton filed false tax documents with the IRS, alleging that various lawyers, bank and utility employees, and Jackson County officials had engaged in suspicious cash transactions in amounts ranging from $100,000 to $500 million.
On several of the forms for "report of cash payments received in a trade or business," called Form 8300, Kelton marked "suspicious transaction," attempting to trigger an IRS audit.
The criminal manual calls the practice a "redemption" scheme, noting the targets are typically IRS agents, federal and state prosecutors, judges, state troopers and private creditors.
"Illegal tax protesters have employed various schemes designed to harass IRS employees and agents, as well as prosecutors and judges, and interfere with audits and criminal investigations," the manual said in a section that lists different harassment schemes under the title "Paper Terrorism."
Dan Wardlaw, an IRS regional spokesman, found about a dozen cases scattered across five states over the past few years in a records search. Oregon easily led the list.
In one earlier case, Duane Harry Panter, 53, of Medford, pleaded guilty in February to filing a false tax document under penalty of perjury after he falsely reported that he transferred amounts ranging from $1 million to $50 million in currency to various Medford officials, including a judge and City Attorney John Huttl in 2000 and 2001.
In another case in Medford, Mark Christian Ware was convicted of filing false Form 8300 documents against several officials, including Jackson County District Attorney Mark Huddleston, two judges and a Medford police officer who arrested Ware during an investigation into the theft of a piano, according to court records.
Like the others, Kelton faces up to three years in prison and a $250,000 fine for each count of his conviction.
At a brief trial, Kelton represented himself. He declined to question witnesses, argue to the jury or respond to the judge's questions, prosecutors said.
U.S. District Judge Owen Panner scheduled sentencing for Oct. 15. Kelton also faces trial Oct. 2 on unrelated conspiracy charges.
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