The Letcher father and son accused of a federal tax evasion scheme dating back to 2002 were found guilty on all charges after a week-long trial.
Ted Nelson, who was representing himself using a defense that he is not subject to federal tax laws based on the belief that no person, only God can own anything on Earth, was detained following conviction.
His son, Steve Nelson, who attempted to get his trial severed from his father’s and did not use the sovereignty defense, was released pending sentencing.
Ted was found guilty last Tuesday on seven counts of failure to file an income tax return and Steve was found guilty on eight counts. Both were found guilty on one count each of impeding the IRS and conspiracy to defraud the US.
Both men were members of a group called the Pembina Nation Little Shell Band of North America, a federally-unrecognized tribe that claims sovereignty from the United States government and its laws. Ted was apparently also a member of the “Republic of South Dakota,” a citizens group also claiming sovereignty.
The two failed to file tax returns and formed 39 trusts, corporations, LLCs and other entities to hide tax liability. Documents state that they opened bank accounts in the names of those fake trusts and used fake Taxpayer Identification Numbers and Social Security Numbers to hide assets and income.
In 2008, after being notified by the IRS that he was under investigation, Steve filed a document in Sanborn County titled, “Declaration of Independence by Political Choice.” In 2011, during his divorce proceedings, Steve testified that he submitted a 2,000-page document as his tax return asking the IRS why he has to file tax returns.
Ted served a year in prison beginning late in 2011 for harboring a man who was wanted for tax fraud and other federal crimes.
The Nelsons will be sentenced Aug. 17, Ted at 9 a.m. and Steve at 1:30 p.m.
They each face a maximum penalty of five years in prison and a $250,000 fine, plus restitution, for the conspiracy charge. Each failure to file charge carries a maximum one year in prison and a $10,000 fine, plus restitution. The impeding charge carries a maximum of three years in prison and a $5,000 fine.