MACON, Ga. (Feb. 15, 2002)—Jimmy D. Lunsford, the only remaining defendant in a “gray market” tire case dating back six years, has been found guilty of conspiracy to defraud the government and four counts of aiding or abetting the filing of false federal excise tax returns.
Mr. Lunsford, 53, was convicted of the counts Feb. 14 in the U.S. District Court for the Middle District of Georgia in Macon.
Owner of Jim Lunsford Sales and GSA International in Scottsdale, Ariz., Mr. Lunsford was accused of involvement in a scheme to buy medium truck tires from manufacturers and distributors for overseas export, then sell them in the U.S.
Through these “gray market” operations, according to a U.S. Department of Justice press release, the conspirators avoided paying the federal excise tax due on the tires.
On Feb. 14, 1996—exactly six years before Mr. Lunsford's sentencing—IRS agents made surprise raids on several tire dealerships across the U.S., seizing bank records, receipts, invoices, disbursement ledgers, tax records, canceled checks and any other documents that might have pertained to the investigation.
Don Isbell, president of Friend Tire Co. in Monett, Mo., wrote his senators and congressman at the time, protesting the “strong-arm” tactics of the IRS. Friend Tire, a subsidiary of Yokohama Tire Corp., ended up pleading guilty on Feb. 9, 2001 to four misdemeanor counts of failing to file quarterly excise tax returns and was fined $100,000.
One other company, Palmer Industries Inc. of Macon, Ga., and four individuals—John Lenderman, Ralph Canney, Sergio Gonzalez and Raymond Garcia—pled guilty to conspiracy, while Paul (Nat) Poston Jr. and Charles McCullough of Palmer Industries pled guilty to aiding and abetting the filing of false excise tax returns. All of them await sentencing.
Mr. Lunsford faces up to 17 years in prison and a fine of up to $650,000. His sentencing date is May 21. Mr. Isbell declined comment during the three-week trial, noting that Friend Tire was no longer a party to the case.
Under the Surface Transportation Act of 1982, only tires weighing over 40 pounds are assessed federal excise tax.