Thursday, March 08, 2012

Yonkers trial update: a curious tax return for Council Member Annabi, with an unexplained unpaid cash loan to her father

Yesterday, the federal corruption trial of ex-Yonkers Council Member Sandy Annabi and her political advisor/alleged briber Zehy Jereis stayed in fairly dry territory, focusing on questionable documents presented by Annabi that have provoked tax charges.

Walid Farhat, who from 2001-05 served as Annabi’s accountant, testified that he blanched at Annabi's decision to claim a tax deduction on a loan to her father--$50,000 in cash--that wasn't repaid.

He asked for proof--"I didn't see it making sense"--and was giving bankruptcy papers. He pressed and asked for the promissory note Annabi claimed. "She said 'that's not your business,'" Farhat testified.

That loss, as well as some $41,000 in mortgage interest, essentially offset her earnings in 2005, Farhat said.

Questions raised

Farhat stated that, in May 2006, Annabi received a query from the New York State Department of Taxation regarding the claimed casualty loss. That may have been the beginning of the inquiries that provoked the charges against the two, which allege that Jereis's stream of payments, some $170,000, caused Annabi to change her vote that year on two projects, including Forest City Ratner's Ridge Hill.

Farhat said Annabi never mentioned that Jereis had paid her student loans or a mortgage, which otherwise would not have been deductible.

Jereis, who claims his payments to Annabi over the years were gifts motivated by his feelings for Annabi, did not file gift tax returns from 2002-08, an IRS rep testified.

The recipient of gifts, the rep acknowledged, is not required to file.

Cross-examination

Farhat, who acknowledged he was not a CPA, actually took a year off in 2003 for non-payment, but said Annabi ultimately never paid.

Under cross-examination, Farhat acknowledged that his memory was bad and that he may have told investigators that he relied in part on Annabi's father to prepare returns.

He also acknowledged that he used a computer program to prepare returns and could not define "casualty loss," as claimed on the returns.

Two residences?

For more details, see the Journal News, which reported:
Also Wednesday, jurors were shown more loan documents on which Annabi allegedly denied she had borrowed any money for the down payments on two of the homes, even though the money came from Jereis. The documents also indicated Annabi intended to use both houses as primary residences, not telling either lender that she was buying the other house at the same time. A mortgage broker testified that one of the houses would have had to be for an investment, which would have made interest rates for that one higher.

The defense contends some of the documents could have been doctored by loan officers to make Annabi more credit-worthy.

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