'Redemption' Internet Conspiracy Theory Backfires for 81-Year-Old Fred Neal

by Mark Friedman  on Monday, Sep. 30, 2013 12:00 am  

On June 18, Fred Neal Jr., 81, pleaded guilty in U.S. District Court in Little Rock.

Neal sold the company sometime in the 1980s, created several trusts and moved his assets into them.

“These trusts were used by [Fred Neal] to shelter or hide [his] assets and income from [his] creditors, including the United States,” according to court documents filed by the U.S. Attorney’s Office.

But the person close to Neal said Neal established the trusts himself and made the mistake of not properly creating them in order to limit tax liability. “He believed that post-retirement income wasn’t taxable,” the supporter said.

So Neal didn’t pay federal income taxes between 1987 and 1994, according to court documents.

Tax Troubles Surface

At the end of 2007, the IRS sued Fred and Doris Neal in the Harrison division of U.S. District Court in an attempt to collect more than $1 million in back taxes. The IRS also wanted to foreclose on 662 acres that the Neals owned in Boone County.

Fred Neal told Arkansas Business in early 2008 that he was retired and didn’t know anything about the lawsuit. He said he thought he had made arrangements to settle the tax bill in September 2006.

He also wondered how the IRS came up with the bill for his wife because she didn’t work. The IRS said Doris Neal owed $541,000.

In what would become a disastrous pattern, Neal decided to represent himself and his wife.

In one filing on Jan. 1, 2008, Neal wrote, “There is no dispute of the facts of this proceeding.” That statement helped the IRS win a summary judgment on Dec. 30, 2008. By that time, the IRS bill had swelled to about $1.6 million.

U.S. District Judge Robert Dawson also ruled the Neals’ property in Boone County could be sold.

But Fred Neal wasn’t giving up his property without a fight.

 

 

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