Stanley Cohen speaks out about tax charges, as supporters rally to his defense | East Villager & Lower East Sider

Stanley Cohen speaks out about tax charges, as supporters rally to his defense

Radical attorneys Stanley Cohen and Lynne Stewart in New York State Supreme Court in 1993. After serving jail time and being disbarred for passing notes from a convicted terrorist client, Stewart was freed this past December because she is gravely ill.   Photo by John Penley

Radical attorneys Stanley Cohen and Lynne Stewart in New York State Supreme Court in 1993. After serving jail time and being disbarred for passing notes from a convicted terrorist client, Stewart was freed this past December because she is gravely ill. Photo by John Penley

Updated Thurs., May 1, 1:30 a.m. Some of this article appeared in last week’s issue of The Villager.

BY SARAH FERGUSON | He’s defended everyone from Lower East Side squatters and the homeless denizens of Tompkins Square Park to the leaders of Hamas and most recently Osama bin Laden’s son-in-law.

Now friends and supporters of radical attorney Stanley Cohen are coming to his defense in the wake of Cohen’s decision to plead guilty to a felony charge of “impeding” the Internal Revenue Service.

On April 14, Cohen appeared in U.S. District Court in Syracuse, N.Y., to accept a plea deal that could land him in jail for 18 months and cost him his law license. He will plead guilty on May 1 in Manhattan federal court on related charges of failing to file taxes in 2006 and 2007. He is scheduled to be sentenced on Aug. 21.

Last week Cohen’s supporters launched a petition drive via the Web site Change.org to ask that the judge show leniency and “reduce the jail sentence to zero in light of Cohen’s many years of public service.” (The petition is online at chn.ge/1iqAlKM .)

The 18-month sentence is part of the terms agreed to under the plea deal. But the judge can reject the plea and call for a reduced sentence “in the interest of justice,” said Jay Liederman, a California criminal defense attorney who worked alongside Cohen to defend hacktivists charged in the so-called PayPal 14 case.

Leiderman concedes “it’s a rare day” when judges depart from the terms negotiated under a plea deal, “but then this is a rare case.”

“There’s not many people on this earth who have put in the kind of work and pro bono service that Stanley has on behalf of his fellow man, so we’re hoping the court will recognize that,” Leiderman said.

At the same time, Leiderman and other members of the newly formed Stanley Cohen Defense Committee have launched an online fundraising drive at Rally.org to help pay off Cohen’s extensive legal bills, as well as the likely cost of restoring his law license once any jail term is served. (The fundraising drive is online at  ral.ly/t/1591822 .)

They are also hoping to finance a speaking tour for Cohen so he can address what he and his supporters view as a concerted effort by federal authorities to “silence” him for his radical views and his work on behalf of politically unpopular clients.

A day before he took the guilty plea, Cohen issued a defiant statement via his Web site, istanleycohen.org, and Twitter. He accused prosecutors of engaging in a political “witch hunt,” starting more than a decade ago, when he claims Department of Justice officials tried to charge him with providing material support to “terrorists” as a result of his work for groups such as Hamas.

After that investigation came up dry, he says federal officials trained their sights on his finances. For the past seven years, he says the I.R.S. has been “harassing” him along with his clients and family members. In 2009, federal agents raided his East Village apartment and law office on Avenue D and his Upstate home in Jeffersonville, N.Y., seizing bank accounts along with a safety deposit box and wall safe in which prosecutors claim they found thousands of dollars of marijuana-scented cash.

In a press statement, prosecutors accused Cohen of failing to  report more than $3.6 million in deposits to his accounts from 2005 to 2010, including some $643,000 in cash deposits that were wired from a convenience store next to the Akwesasne Mohawk Reservation, where many of Cohen’s clients reside.

(According to court records, a number of Cohen’s clients had been charged with smuggling, transporting and selling bulk amounts of marijuana in and around the reservation.)

“Stanley Cohen sought to avoid his tax obligations by consistently failing to file his federal and state tax returns over a six-year period and by operating his law practice in a manner that corruptly hid millions of dollars in legal fees from the Internal Revenue Service,” charged U.S. Attorney Richard Hartunian. “No citizen, especially an attorney, is above the law.”

Cohen concedes he didn’t file completed tax returns from 2005 to 2010, but says he filed extensions for each of those years — including estimates of projected income — and made partial payments of $30,000 to $40,000 each year.

The $3.6 million in deposits cited by the feds does not take into account more than $2.6 million in expenses, he maintains.

“To say that I failed to pay taxes on $3.6 million, that’s like smoking crystal meth,” Cohen scoffed, in a phone interview with this newspaper.

“The final [tax] reports were not made because there were disputes over the charges,” Cohen explained.

“What we’re talking about is a pissing contest over the amount owed with interest and penalties,” Cohen charged. “But lots of people get into disputes with the I.R.S. over their taxes. Tell me, who goes to jail over this type of thing? If I represented different people, in a different kind of practice, I wouldn’t be in this position.”

In fact, some of the things he’s pleading to aren’t necessarily crimes at all. Among the complaints listed by the feds are “keeping significant amounts of cash in a safe,” making cash deposits and paying for expenses in cash, and accepting barter in lieu of payment from clients.

Prosecutors say such practices “impeded” the I.R.S. from being able to accurately calculate Cohen’s earnings.

Much of it sounds like sloppy bookkeeping. The feds say Cohen failed to file W2 or 1099 reports for his single full-time legal assistant, and neglected to submit Form 8300 reports for cash transactions greater than $10,000.

“They are charging me with failure to keep proper business records when my practice is just one attorney and I don’t charge by the hour and never have,” Cohen told The Villager.

Cohen said he operated on a cash basis Upstate, in large part, because most of his clients in the Mohawk territories don’t use banks.

“There are no banks in Akwesasne, almost no one has a checkbook,” he pointed out.

Cohen ridiculed the notion that he was trying to conceal his income by having clients send MoneyGrams from a convenience store to his American Express credit card account.

“If I was trying to hide cash, why would I have people wire money to an Amex account under my name — when there are records for all those transactions?”

He also disputed allegations that he instructed clients to wire sums less than than $10,000 in order to avoid triggering automatic reports to the I.R.S.

“You can’t send amounts over $10,000 by MoneyGram, $9,000 is the limit,” he noted.

“This wasn’t money hidden in offshore bank accounts. There’s no laundered drug money. It’s crap,” Cohen continued. “I dare them to find a single penny anywhere buried, hidden or disguised.”

Although federal prosecutors allege he earned more than $500,000 for each of the tax years in question, Cohen estimates his actual earnings were more like $130,000 to $140,000 a year.

“I probably owe $25,000 to $35,000 a year beyond the payments that were made. We’ve been fighting with the I.R.S. for a number of years over what we consider to be deductions and expenses, and we’ve been frozen at a standoff.”

Nevertheless, Cohen says the seven-year-long investigation has taken a toll on him and his family, and cost more than $600,000 in legal fees thus far. Facing trials in two separate districts, hundreds of thousands dollars more in legal expenses, and the prospect of several years in jail were he convicted, Cohen said he opted to take a plea.

“It had started to impact my practice — particularly the international cases I do,” Cohen revealed. “After going through $600,000 in legal costs and causing everyone stress and strain, and facing another $500,000 to $600,000 and another three or four years of litigation — after a while you reach a point where you say, f— it,” he said.

While Cohen initially assumed he would forfeit his law license of 31 years by taking a guilty plea, he now says that’s not clear. “Impeding” the tax code is a federal offense, but it is not a crime in New York State. It would be up to the discretion of the New York court system whether or not to strip him of his license, he says. (Generally, being convicted of any kind of felony is automatic grounds for disbarment, legal observers say.)

Yet even though he is still awaiting sentencing, Cohen was not shy about lashing out at state and federal authorities for pursuing what he portrayed as a vendetta against him — particularly prosecutors in the Northern District of New York, where he says he’s been a “thorn in their side” for decades.

“Over the last 20 years, I have successfully sued half a dozen federal law enforcement agencies for things like illegal seizures, government harassment and false arrest — actions that have resulted in federal agents being penalized. One of prosecutors on this [tax] case actually confronted me outside a courtroom in 1995 and said he would have indicted me then if he could,” Cohen claimed.

Four years ago, Cohen filed a 40-page complaint against prosecutors in the Northern District, accusing them of “systemic prosecutorial misconduct.”

The U.S. Attorney’s Office declined to comment on the case or any allegations prior to Cohen’s sentencing.

Cohen has always seemed to relish his role as an outlaw lawyer. Back in 1990, the Canadian government charged him with “seditious conspiracy” for his role in defending the Mohawk Warriors. Over the years he’s filed suits against the state of Israel for what he called the “theft of Palestine” and has represented dozens of people charged with terrorism here and abroad. He’s also been a diehard defender of activists — from the Weather Underground to the Black Bloc and Occupy Wall Street.

But now Cohen seems worn down by all the legal proceedings. During the  terrorism trial of Al-Qaeda spokesperson Sulaiman Abu Ghaith, Cohen complained of suffering “vertigo” from stress and sleepless nights. After Abu Ghaith was convicted on March 27, Cohen asked the judge to postpone his own trial, claiming exhaustion. (The judge refused.)

So isn’t he worried that if he doesn’t sound contrite, the judge could throw out the plea deal and order a trial?

“What should I do, go silently into the night, and undo 40 years of my beliefs?” Cohen responded. “It’ll be what it’ll be. S— happens.  I’ve had plenty of colleagues over the years go to prison for far longer, or get assassinated.”

He says he’ll make use of his jail time by assisting the “unjustly accused” and writing his memoirs.