Michael C. Cooper, Convicted in Tax Scam, Dies a Prisoner at 66

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For decades Michael C. Cooper ran small-time investment and marketing scams in Topeka, Kan., repeatedly clashing with securities and consumer protection agencies. He mocked their actions as inconsequential and ineffective.

Then, in 1997, as Senate hearings in Washington were dramatizing supposed abuses of taxpayers by the Internal Revenue Service, Mr. Cooper saw an opportunity to profit from public resentment of the tax system — and to move up from a local flimflam artist to a national one.

He launched Renaissance/The Tax People, a tax-avoidance business that ultimately ensnared about 50,000 Americans — until a Kansas state judge shut the firm down in 2001, ruling that it was an illegal pyramid scheme of a “fundamentally deceptive nature” that had cost customers and investors at least $84 million.

Tried, convicted and sentenced to 25 years to life in prison, Mr. Cooper never got out. He died on Friday, the Federal Bureau of Prisons confirmed without stating a cause. He had been held at the United States Penitentiary at Leavenworth, Kan., before being moved to a nearby hospital three months ago for bypass surgery, which did not go well, according to a social media post by his daughter, Crissy Moussa.

Mr. Cooper, who had been scheduled for release in August, was 66.

Mr. Cooper’s business involved soliciting investors who would pay up to $1,200 plus $100 a month for each “package” of tax-avoidance methods they received, with promises that their income tax obligations would shrivel.

The Tax People was the subject of a front-page article in The New York Times in September 2000, part of a series on tax schemes that was awarded a Pulitzer Prize.

That article examined Mr. Cooper’s claims that “golf, hunting, fishing and even vacations with your family” could become tax-deductible expenses for those who bought the company’s system. The Tax People boasted that its “Tax Dream Team” included former I.R.S. officials who were such powerful advocates for the Cooper system that I.R.S. auditors had wilted before them. One team member was Jesse A. Cota, a former I.R.S. district director in California.

In an interview in his San Diego hotel suite in 2000, Mr. Cooper told a reporter that dropping a business card in a fishbowl at a restaurant’s cash register made the meal, parking and mileage to and from the establishment tax-deductible. Asked by The Times to identify a statute, regulation or court case authorizing such deductions, Mr. Cooper said the answer was in his company’s promotional materials. Advised that no authority was cited in those materials, Mr. Cooper said the right to such deductions was common knowledge. He then said that one of his “Tax Dream Team” experts would explain. When asked which team member should be queried, Mr. Cooper stood up and walked out of the room.

Carla Stovall, the Kansas attorney general at the time, asked a state court in 2001 to shut down the business. At a civil court hearing, Charles W. King, a professor of marketing at the University of Illinois at Chicago, testified that The Tax People was a legitimate marketing firm.

Professor King’s testimony came after Mr. Cota had admitted in court that the firm’s claim to have signed up thousands of tax professionals was false, and that the real number was 541.

Mr. Cooper’s firm also told investors that it had won every tax audit. Mr. Cota admitted that this had not been true for 59 percent of the audits.

Mr. Cooper and his team, court papers showed, falsely asserted that “every strategy contained in the Tax Relief System is absolutely sound, unassailable and proven over the past 40 years,” and that the system “was approved for continuing education credit for C.P.A.s in all 50 states.”

Richard D. Anderson, a Kansas state court judge, ordered the firm closed and directed Mr. Cooper to forfeit his assets.

“At its core,” the judge wrote, “the Renaissance marketing plan is a clever scheme to extract money from consumers through the use of misrepresented facts, exaggerated claims and projections, undisclosed material facts and false promotions.”

Judge Anderson jailed Mr. Cooper for contempt of court and ordered him to forfeit $13.6 million, but freed him 13 days later on Mr. Cooper’s promise to travel to Mexico to recover $2 million that he said belonged to him. When Mr. Cooper failed to return, Judge Anderson ordered his home in Topeka, 80 acres of land and other property seized.

A raid on the company headquarters — in the Fleming Mansion, one of Topeka’s most notable homes — yielded 240 Australian gold coins, 310 Canadian gold coins, a Mercedes-Benz, a Dodge Viper luxury sports car and a 2.37-carat diamond ring.

I.R.S. agents, postal inspectors and state authorities also found more than $8 million in cash and records of bank accounts holding millions more.

In late 2004, Mr. Cooper was arrested while crossing into the United States from Mexico at Laredo, Texas. His Topeka lawyer, Jerry Berger, said at the time that he was unaware of a sealed 148-count federal indictment against him and his “dream team.” Mr. Cooper had been living in Puerto Vallarta with his wife, Mary Cooper, and two children, Mr. Berger said.

Eric Melgren, the United States attorney for the Kansas district at the time, said that Mr. Cooper and his confederates had been “selling something that was too good to be true,” and that it was just “bad advice, wrapped up in glossy packages and false promises.”

Mr. Cooper went to trial. Other members of his team pleaded guilty to money laundering, conspiring to defraud the federal government and other charges and were given much lighter sentences.

Mr. Cota was sentenced to two years in prison. His experience as a former I.R.S. executive had been central to Mr. Cooper’s marketing claim that the Renaissance system was endorsed by the I.R.S. Mr. Cota was paid more than $300,000. He was fined $250,000.

Among those who paid to join Renaissance/The Tax People was Marcy Szarama, the owner of a construction management firm in Southern California. She said a police officer had recommended the system as a legal way to reduce income taxes.

“The Tax People were encouraging you to start your own business, just so you could have a tax write-off, but there was no other real intention other than tax deductions,” Ms. Szarama said in a phone interview, adding that she had grown suspicious after joining because the tax-avoidance strategies seemed vague. She said she had lost about $4,000 and received no restitution.

Steve Kassel, a tax preparer in South San Francisco, said he now regretted working with Mr. Cooper and Mr. Cota. He withdrew, he said, after being alarmed by some of the company’s marketing claims, but acknowledged that he had left too late to avoid disciplinary action. For five years he lost his authorization to represent clients in I.R.S. proceedings.

“I should have listened to my wife when she told me to avoid it,” Mr. Kassel said of the Cooper organization in a recent phone interview.

(The Senate hearings that had inspired Mr. Cooper elicited testimony that I.R.S. auditors, collections officers and criminal agents had run roughshod over taxpayers. Subsequent investigations by The Times, Tax Notes magazine, the newspaper The Virginian-Pilot and other publications showed that virtually all of the testimony had been incomplete, misleading, unverifiable or contradicted by public records. Under federal law the I.R.S. could not respond to any of the Senate testimony.)

Little is known about Mr. Cooper’s early life, even among people who were familiar with him.

Mr. Cooper’s widow, daughter and son, as well as one of his lawyers, did not respond to multiple calls and emails after his death was confirmed.


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