IRS Takes Word of Convicted Embezzler Over Honest Restaurateur

By National Center for Public Policy Research | July 7, 2008 | 8:21pm EDT

(Editor's Note: The following is the 44th of 100 stories regarding government regulation from the book Shattered Dreams, written by the National Center for Public Policy Research. will publish an additional story each day.)

Armed Internal Revenue Service agents raided John Colaprete's Virginia Beach, Va., restaurant because they mistakenly took the word of a convicted embezzler at face value.

Colaprete suspected his bookkeeper was embezzling money from him. After he confronted the bookkeeper, she admitted to stealing and said she would make restitution on the approximately $40,000 she stole.

Instead of making restitution, however, she went to the IRS and claimed Colaprete was involved with money laundering, gunrunning and drug dealing. The woman is a convicted felon who had an outstanding warrant for her arrest when she made her claims to the IRS. After spending less than 48 hours investigating the bookkeeper's claims, IRS agents conducted raids on Colaprete's home and business, as well as the home of one of his managers. At the time, a Federal Bureau of Investigation agent advised everyone involved in the case to be skeptical about the claims made by Colaprete's accuser. The FBI specifically declined to get involved in the case against Colaprete.

During the raid on Colaprete's home, the IRS kicked in his door, impounded his dogs and took his personal safe, along with 12 years of personal income tax returns and supporting documents. It took four months for the IRS to return most of the confiscated documents. They did not, however, return an heirloom watch given to Colaprete by his late father. After scrutinizing the records, the IRS did not have evidence to charge Colaprete with a crime. Even though he was never charged with a crime, Colaprete never received an apology for this harassment from the IRS.

Nor did he get his watch back.

Source: Testimony of John Colaprete before the Senate Finance Committee

Copyright 2003, National Center for Public Policy Research

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