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Tuesday, May 10, 2016

GIVE YOUR REGARDS TO THE 'COHAN RULE': Trust Me, I Don't Have Receipts, But I Expended Something!

May 6, 2016 Defense response reveals Steven Ingersoll's five-figure payment to a sitting Bay City Academy board member...and Ingersoll still wants to deduct it as an expense!

“In this case, Defendant Ingersoll has not just established that he “expended something,” but has demonstrated through bank records and credit card statements the exact amounts of money spent. 

It is true that the Court will have to evaluate the accuracy of his recollection of the exact purpose behind the expenditures, but the government’s objections go to the weight not the admissibility of the Defense Exhibits 101B and 101C.” 
May 6, 2016 Defense response 
to government's April 1, 2016 motion 
U. S. v. Steven Ingersoll 

Here's a question for you:

Do you think government prosecutors know Dennis Griffith, identified as the recipient of $13,000 in the May 6 defense response to the U. S. government's motion to exclude all versions of Steven Ingersoll's Defense Exhibit 101 (established to seek previously unclaimed credits, deductions, and exemptions to reduce his income tax liabilities for 2009, 2010 and 2011), received the cash while he was a member of the Bay City Academy board of directors? And that Griffith remained a director until 2015?

Dennis Griffith, at bench
And do you suppose they're aware the purported “teaching optical lab/BCA vocational training program at Wolverine Arts guild” described in the defense motion never happened?

Well, they do now.

Broadway legend George M. Cohan was a hugely successful songwriter, singer, dancer, actor, playwright, theatrical producer, and director. 

One of his most famous songs is the classic "Give My Regards to Broadway." 

Among tax nerds (I know you're out there), however, George M. Cohan is famous for something else--something all taxpayers should thank him for: the Cohan Rule. 

The Cohan Rule came about when the entertainer was audited and the IRS disallowed his numerous business travel and entertainment expenses because he lacked receipts. 

Cohan appealed, and the court held that the IRS should accept his estimates of his expenses. 

Thus, the Cohan Rule stands for the proposition that taxpayers who lack receipts may provide estimates of their expenses and the IRS may accept them if they are reasonable and credible. 

The Cohan rule recognizes that all business people must spend at least some money to stay in business and so must have had at least some deductible expenses, even if they don’t have adequate records to back them up.

“Reasonable” and “credible” are two words not generally associated with convicted felon Steven Ingersoll.

(What's next...“It has nothing to do with Grand Traverse Academy, and it has nothing to do with Full Spectrum Management.” )

Ingersoll had previously submitted his proposed Defense Exhibit 101, 101A, 101B and 101C, and wants to rely on a version of his proposed Defense Exhibit 101 to reduce his federal tax liabilities. 

U. S. government attorneys are seeking to exclude the various versions of Ingersoll’s proposed defense exhibit 101 from the sentencing hearing when it resumes.

(The government had previously pressed those issues in court before the evidentiary sentencing hearing was sidetracked by Ingersoll's April 1 heart attack and subsequent quadruple bypass surgery.)

Ingersoll responded by sending the government his “cash register” in Excel format on February 26, 2016, and his proposed Defense Exhibit 101 in Excel format on March 3, 2016. 

However, after hours were invested by the IRS case agent and government attorneys in attempting to analyze the entries in Ingersoll’s proposed Defense Exhibit 101A, produced initially on February 23, 2016, Ingersoll emailed to the government two more versions of his sentencing calculations for proposed Defense Exhibit 101 on March 18, 2016. 

The two new versions of Ingersoll’s proposed exhibit are identified as proposed Defense Exhibits 101B and 101C. Ingersoll’s sentencing calculations in those renditions differ from his previously proposed Defense Exhibit 101 and Defense Exhibit 101A. 

Claiming that none of the four versions of Ingersoll's defense exhibit are comparable or independently verifiable, the government asserts Ingersoll’s listing of entries and the calculations made on the basis of his entries change from version to version.

Quelle surprise! 

And Ingersoll produced those versions of his claimed expenses, credits and deductions only after the court had concluded 13 days of evidentiary hearings — spread out over five months, beginning in October 2015.  

And Ingersoll’s proposed exhibit has ballooned from roughly 40 pages to over 80 pages.

Ingersoll’s initial presentence report (PSR) was completed and produced to the parties on April 29, 2015 – eleven months ago. Any objection to that PSR were due in June of 2015. 

By any reasonable measure of timeliness, the government dubbed Ingersoll’s March 2016 version of his claimed credits, expenses and deductions as “untimely”. 

Let's get to the guts of this thing, along with the defense argument.

I could go on and on about the litany of apparent personal expenses that have cropped up as business deductions (for example, schlepping down to the only IKEA store in Michigan, on Ford Road in Canton, to drop $508.12 on “furniture and decorating supplies” that were originally coded as a purchase for Ingersoll's Traverse City home), and a $321.63 restaurant splurge at Bay City's Atrium (spluttering distance from the federal courthouse) where Ingersoll now claims he conducted IVL research, but let me get right to the tastiest nuggets: a $13,000 intellectual property-related expense paid on October 1, 2010 to one Dennis Griffith, with another $500 paid out to Griffith on December 2, 2010.

Griffith, shown in the screen grab at left being sworn in as a member of the Grand Traverse Academy's original board of directors, was tapped by Ingersoll in 2010 as the founding optician of iSPECS Online, one of the many abortive business efforts Ingersoll launched hoping they'd fly.

(Can you say floppola?) 

Optical equipment?
Contemporaneous reporting, including this Bay City Times story from December 9, 2010, touted Ingersoll as a visionary, and detailed his plan to turn Bay City's Wolverine Building at 114 N. Jackson Street  (which formerly housed the now-defunct Wolverine Knitting Mills) into a specialty guild where unemployed residents would be trained to make a variety of products, including optical lenses.

Like a lot of Ingersoll's Barnumesque business ventures, this one flopped worse than 1985's New Coke.

Funny, though, $500 was paid to Dennis Griffith on December 10, 2010, one day after his picture ran in the Bay City Times.

(Wonder if Ingersoll got a signed model release form?)

The Wolverine Building was gutted in anticipation of Ingersoll's  grand renovation, but never used as a Bay City Academy vocational training center.

However, during the renovation of the Bay City Academy's Madison Arts campus, the Wolverine Building was reportedly pressed into service by Roy Bradley to stash bags of asbestos removed from 400 N. Madison Avenue building — before they were dumped by members of Bradley’s crew in dumpsters in Saginaw.


  1. So that is why he set up a room and meticulously shredded every receipt and piece of paper he had in his possession. Getting rid of the real facts or any evidence. Gotta wonder what other skeletons are in his closet. I think I have an idea.