April 16, 2002

The articles below paint a bleak picture for the person they were written about, Lynne Meredith.  Those of you who have watched the video on our site have seen Lynne Meredith, because she appears in it and discusses the meaning of the word "includes".  She has been in the anti-tax movement since about 1990 and as the articles below indicate, she published two books  Vultures in Eagles Clothing and How to Cook a Vulture, which appear on our recommended list.  The stories below don't tell you about several crucial reasons behind why the IRS struck her and tried to shut her down:

  • She has an organization called "We The People" and if they could discredit her "We The People", then they must have figured the other "We The People" (, Bob Shulz), which had a big demonstration the day before, would be discredited also by association.  These two organizations, however, are in no way affiliated, but the government apparently would like most people to believe that they are.
  • Lynne Meredith was raided by the IRS in 1999.  The IRS claimed that someone with a name like hers was involved in criminal activity.  It was all fabricated and the warrant they used was defective as well.  Her secretary, Gayle Bybee, was held at gunpoint while the IRS rummaged through her records to gather evidence to later indict her, which they did as you can see.  She sued them for several million dollars and at the time of her arrest on April 16, 2002, she had just completed discovery and was getting ready to go to trial.  She had transcripts of depositions of 40 different IRS agents who participated directly or indirectly in the illegal raid.  We spoke with her about this back in February 2002 and she said that the judge told her that if the facts and allegations she was making about what the IRS were true, she had a slam dunk case.  The IRS must have been afraid that they might lose the case!  If they could throw her in jail on other charges, then they probably figured she wouldn't be able to effectively litigate from prison and the statute of limitations would run out before she could bring the case to trial and collect the huge monetary damages she was likely to be awarded.
  • The feds wanted to limit distribution of her Vultures in Eagles Clothing and How to Cook a Vulture.  These books were well-researched studies into the illegality of the federal income tax that have become very popular and upon which many of the points made in our Great IRS Hoax book are based.  She marketed the books via a multi-level marketing scheme.  They couldn't go after her for marketing these books under the First Amendment, so they attacked her using the lucrative business she established making trusts for her readers in order to protect their assets.  She would charge $895 for each trust and she had just come out with a book on Common Law Pure Trusts.  That book has been out for only about one year.  What the IRS did was probably the following in order to go after her:
    • Bought her book on Pure Trusts.
    • Bought a trust from her and paid for it with a check for $895.
    • Put a tracer on the check they wrote to her to find out where it went and what bank account it was cashed in.
    • Pursued people who had been hurt by her trust business so they could drum up charges against her.
    • Scoured the materials they had illegally seized back in 1999 to drum up charges against her.
  • After they criminally indicted her put her in jail, they used the leverage they gained to get her to shut down her website at  Right after the mass arrests, they made a deal with her that she would be released on bail if she would shut down her website.  The last time we went there, it said:

"Lynne Meredith has been Ordered by the Court to take this web site down as a condition for her release during the pending action against her.  Therefore this web site will not be available nor orders accepted until further notice."

  • By shutting down her website, they could deprive her of the revenues she needed to be able to afford to legally defend herself.  If they were going after her for trusts, they should have only asked her to shut down the portion of her website that related to those trusts.
  • The feds had no jurisdiction to either raid her or arrest her, because she was not resident on federal property and outside of federal jurisdiction.  If anyone prosecuted her, it should have been the California Attorney General.
  • The charges they are framing her for are from Title 18 of the U.S. Code, which only applies on federal property.  The only reason the charges would stick would be because the judge exceeded his authority and his jurisdiction, which is a criminal offense.

If you learn anything from the articles below, it should be that in order to stay out of trouble, you should:

  • Avoid selling anything.  Just give away your information and tools.  If you sell anything to consumers, ensure that they sign a release absolving you from liability so that you cannot be prosecuted for wrongdoing.  Sell INFORMATION and BOOKS, but not legal advice or legal services.  Put a disclaimer on everything you sell or provide in case the IRS finds a malcontent on their payroll or a discontented employee on YOUR payroll who will become a witness against you in court and complain about how you wronged them.
  • Keep all your records in electronic form scanned in on your computer and locked down with encryption and a password.  Do not keep paper records.
  • Keep backups offsite in a place not connected with your name and social security number.
  • Do not respond to calls from your readers asking for legal advice.  Only answer questions about your materials but not how to apply those materials to specific situation.

We follow the above guidelines and it has been effective and keeping us out of trouble.  We don't sell anything, but simply use our First Amendment right of free speech to spread the truth and gather more truth.

Anti-Tax Activist Arrested for Fraud 
Tue Apr 16,12:37 AM ET

By CHELSEA J. CARTER, Associated Press Writer

SANTA ANA, Calif. (AP) - An anti-tax activist who once boasted she had never paid income taxes was arrested Monday for allegedly promoting bogus tax shelters and encouraging the filing of phony returns.

Six others also were charged in the alleged fraud scheme.

The arrest of Lynne Meredith, who headed up the anti-tax group We The People, came nearly a decade after she first began publicly lobbying against income taxes.

In a federal indictment, Meredith was accused of encouraging people to open bank accounts with phony taxpayer identification numbers, filing fraudulent tax returns and encouraging tax payers not to file returns.

The indictment also alleges Meredith, 52, earned more than $6.2 million between 1994 and 1999 but didn't file a federal income tax return.

Meredith has written two books and given hundreds of seminars instructing people how to "legally stop paying taxes." Her books advise readers to file tax returns that accurately report income but request a refund of all taxes paid, or create tax shelter trusts to protect income and assets from taxes.

She sold the trusts through her company, "Sovereignty Pure Trusts."

The Internal Revenue Service (news - web sites) said Meredith's actions caused taxpayers to file fraudulent returns, some of which sought as much as $21,000 in refunds. None of the refunds were paid, records show.

"Meredith misled numerous people into believing that the tax shelters she was selling would legally keep them from having to pay income taxes. Instead, many of these people now find themselves owing back taxes, penalties and interest," said Michael S. Kochmanski of the Los Angeles office of IRS criminal investigations.

The others charged with one count of conspiracy and 11 counts of mail fraud were trust salespersons employed by Meredith.

A message left Monday at the Huntington Beach office of We The People was not immediately returned.


Seven individuals associated with a tax fraud group known as "We the People" and "Sovereignty Pure Trusts" were arrested this morning on various federal charges related to the promotion of bogus tax shelters that falsely promised to limit exposure to federal income taxes.

A federal grand jury in Los Angeles on Thursday returned a 35-count indictment that includes charges of conspiring to defraud the Internal Revenue Service and fraudulently using Social Security Numbers and passports.

The California residents arrested this morning are:

Lynne Meredith, 52, of Sunset Beach, the owner and operator of We the People and Sovereignty Pure Trusts; Gayle Bybee, 54, of Sunset Beach; Gregory Paul Karl, 52, of Solana Beach; Teresa Manharth Giordano, 39, of Murrieta; Willie Watts, 43, of Murrieta; Betty Erickson, 57, of Windsor; and Nora Moore, 53, of Huntington Beach. 

These defendants are expected to make their initial court appearances this afternoon in various federal courthouses in California.

According to the indictment, from October 1994 to November 2001, Meredith sold books and bogus trusts to people with the purpose of leading them to believe they could legally protect income and assets from taxation. The defendants allegedly encouraged and assisted taxpayers by forming phony trusts, opening bank accounts with phony Taxpayer Identification Numbers, filing fraudulent income tax returns and encouraging taxpayers not to file income tax returns.

We the People sold the "trusts" for approximately $500 at seminars that were held throughout the United States and internationally. To entice potential trust purchasers at seminars, Meredith represented that the trusts were "professional and affordable" and that each trust was customized with the "combined efforts of attorneys, paralegals, CPAs and other professional staff for its execution."

When purchasers complained about the trusts, "We the People" which was also known as "Free the People", "Sovereignty Pure Trusts" and "Liberty International" refused to issue refunds.

Meredith also encouraged taxpayers to file frivolous tax returns that, for example, accurately reported income but fraudulently requested a refund of all income taxes paid. The defendants also encouraged taxpayers to send protest correspondence to the IRS with the purpose of impeding and obstructing the IRS.

Meredith wrote books, including "How To Cook A Vulture" and "Vultures In Eagle's Clothing", in which she falsely claimed that individuals could lawfully stop paying income taxes, stop their employer from withholding income taxes, and refuse to produce books and records to the IRS. The books contained examples of frivolous tax returns and protest letters.

From 1994 to 1997, according to the indictment, Meredith caused taxpayers to file fraudulent income tax returns with the IRS. Those fraudulent tax returns sought refunds for as much as $21,855.00 but the IRS did not issue any refund checks.

The indictment also alleges that Meredith earned more than $6.2 million from 1994 through 1999 as a result of the scheme. Meredith did not file a Federal income tax return during these years, and she did not pay any federal income taxes.

The indictment further alleges that six of the other defendants did not file nor pay any income taxes on income they earned in the scheme.

An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Eileen J. O'Connor, Assistant Attorney General in charge of the Justice Department's Tax Division, said: "The Department of Justice and the IRS are committed to stopping promoters of illegal tax schemes from selling false promises, obstructing lawful IRS functions and cheating honest taxpayers."

Michael S. Kochmanski, Special Agent in Charge of the Los Angeles Field Office of IRS-Criminal Investigation, stated: "Meredith misled numerous people into believing that the tax shelters she was selling would legally keep them from having to pay income taxes. Instead many of these people now find themselves owing back taxes, penalties and interest. The public should be wary of anyone who says that they have away to keep you from having to pay income taxes."

All seven defendants are charged with conspiracy and 11 counts of mail fraud (both charges carry potential five-year prison sentences).

Meredith is additionally charged with two counts of false representation of a social security number (five-year maximum sentence), one count of passport fraud (potential 10-year sentence), and five counts of failing to file a tax return (each count carries a maximum penalty of one year in prison). Bybee is accused in three counts of failing to file; Giordano is named in two counts of failing to file; Watts faces three counts of failing to file; Erickson allegedly failed to file for three years; and Moore is named in three counts of failing to file.

The indictment names an eighth defendant in the case, Toni Smith Silva, 49, of Cypress, who is charged with one misdemeanor count of failing to file a tax return. Smith will be summoned to appear in court for an arraignment. 

Today's arrests come two days after the Department of Justice and IRS filed a civil law suit against individuals in San Diego, Boston and Cincinnati for selling bogus trusts to hundreds of taxpayers. The IRS has been cracking down on promoters of abusive trusts by filing civil law suits and launching criminal investigations. On Thursday, IRS Commissioner Charles O. Rossotti testified before the Senate Finance Committee that "identifying and combating actively promoted tax schemes was the IRS' highest compliance priority."

The case against the promoters of We the People and Sovereignty Pure Trusts is the result of a continuing investigation by IRS-Criminal Investigation. Victims who purchased trusts or books issued by this group are encouraged to contact IRS-Criminal Investigation at (949) 389-4466.

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Last revision: August 14, 2009 08:07 AM

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