Jimmy D. Lunsford, 53, a Scottsdale, Ariz., tire dealer, has been sentenced to 41 months in prison and must pay restitution of $96,533 for his participation in a ``gray market'' scheme to defraud the government of federal excise taxes due on medium truck tires.
Mr. Lunsford, owner of Jim Lunsford Sales/GSA International in Scottsdale, also was given three years' supervised release in the sentence handed down May 22 by Judge Duross Fitzpatrick of the federal district court in Macon.
The sentencing brings to an end a six-year investigation by the Internal Revenue Service and the U.S. Justice Department that began Feb. 14, 1996, with a surprise raid on tire dealerships across the country.
Bank records, receipts, invoices and other documents were seized, and one company president-Don Isbell of Friend Tire Co. in Monett, Mo.-wrote his senators and congressmen at the time, protesting the IRS' ``strong-arm'' tactics.
Under the Surface Transportation Act of 1982, tire dealers must pay excise tax on all tires weighing 40 pounds or more.
This superseded an earlier law requiring excise tax on all tires. For tires intended for export, however, the tax is waived.
According to investigators, Mr. Lunsford and his co-conspirators bought tires from manufacturers and distributors for overseas sales, then sold them in the U.S. instead, thus avoiding the excise tax payments to the government.
Mr. Lunsford, the only defendant to go to trial, was convicted Feb. 14 in Macon of conspiracy to defraud the government and four counts of aiding or abetting the filing of false federal excise returns.
Among the other defendants, Friend Tire pleaded guilty in February 2001 to four misdemeanor counts of failing to file quarterly excise tax returns, and was fined $100,000.
Six other defendants-John Lenderman, Ralph Canney, Sergio Gonzalez, Charles McCollough, Raymond Garcia and Paul ``Nate'' Poston Jr.-pleaded guilty on lesser charges of conspiracy and/or filing false tax returns.
Mr. Poston was sentenced May 14 to five years' probation and a $6,000 fine. The other five, sentenced May 22, all received five years' probation.
In addition, Mr. Garcia was ordered to pay $32,655.24 in restitution, and Mr. McCollough was ordered to pay restitution in an unspecified amount.