Dec. 30, 2007: Ex-CEO regrets 'mission' to take on IRS

  • Article by: RANDY FURST , Star Tribune
  • Updated: December 30, 2007 - 8:51 AM

Robert Beale, awaiting a trial for tax evasion, ponders all that he once had -- and lost.

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A photo of Robert B. Beale, founder of Comtrol Corportation, hung in the company lobby last year.

Photo: Bruce Bisping, Star Tribune

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Robert Beale's world is in collapse.

Not so very long ago, he had a wife, a family and substantial wealth. He was a leader of his church and a successful business executive.

Then he decided he had the legal right to stop paying his taxes.

Now Beale wears the orange jumpsuit of a jail inmate, back in custody after 14 months as a fugitive. His wife has divorced him and seized his assets. His son has ousted him from the Maple Grove computer firm Beale founded.

He spends his days in a jail cell, preparing for a trial that could send him to federal prison for a decade or more for tax evasion and unlawful flight.

"The hardest part is thinking about family and friends on the outside," said Beale, 64. "Emotionally, it's horrible ..."

Beale said: "In hindsight, I believe I was not wise. I'm sorry I even took this mission. ... I was very naive."

Regrets taking on IRS

Beale got involved in the tax protest movement years ago. He failed to show up for his federal trial in Minneapolis in August 2006, resulting in a 14½-month manhunt.

Now held at the Sherburne County jail in Elk River, Beale talked about the reasons he went on the lam (he needed more time to prepare his case), his life as a fugitive (he took a cruise) and how he got caught (he said his ex-wife tipped off authorities). He said he regretted taking on the IRS and failing to pay his taxes.

"I never imagined they would take such a hard line," he said. "I assumed if they ended up disagreeing with me, I would just pay the taxes."

While no household name, Beale has been in the spotlight before. He was Minnesota campaign manager for Pat Robertson, the conservative television evangelist who ran unsuccessfully for president in 1988.

For about 10 years until the mid-1990s, Beale said he was a major contributor and board member of Living Word Christian Center, a large Brooklyn Park church where Mac Hammond is senior pastor.

Hammond said through his daughter-in-law and assistant, Kristin Hammond, that he and Beale "had points of disagreement and taxes were one of them." Hammond said "he was very sorry for what has happened to Bob."

Beale, a Massachusetts Institute of Technology graduate, was an engineer with an entrepreneurial touch. A firm called Artist Graphics that he started in the early 1980s had revenue of up to $35 million a year by the end of the decade, according to his eldest son, Theodore Beale, who now lives in Italy.

As the computer graphics industry shifted from computer cards to chips, the firm folded. But Beale had started Comtrol, which makes devices that connect peripherals like printers and modems to computers. Comtrol's revenues rose to about $25 million, and at its peak it had up to 100 employees, Theodore Beale said.

Beale's issues with the IRS surfaced in the early 1990s when he had a dispute with the IRS over an Artist Graphics facility located in Ireland, Theodore Beale said.

Anti-tax crusaders

Beale later began reading books about the tax code. One was by Irwin Schiff, one of the nation's leading anti-tax crusaders. Beale attended one of Schiff's seminars.

In February 2006, Schiff, 78, was sentenced to more than 13 years in federal prison for advising people that no U.S. law requires them to pay income tax.

Meanwhile, Beale read more books like Schiff's, and said he concluded that the federal income tax "applies to a profit from business that's related to the federal government and it also applies to any employee of the federal government."

He began filing annual tax statements, he said, claiming he did not think his income was taxable because he was not a federal employee. He said he believed he was on a mission.

The IRS had different ideas. In January 2006, Beale was indicted by the U.S. attorney's office for tax evasion. His passport was confiscated.

Prosecutors declined to comment for this story. In court filings, they indicated Beale did not want Comtrol to pay him directly for his income in 2000, so he and company President Lee Stagni had Beale paid through a shell company, "Chayil."

It functioned as a pass-through entity for concealing Beale's income from the IRS, and Comtrol documents were then backdated, Assistant U.S. Attorney Timothy Rank alleged. Beale filed no federal or state tax returns for 2000 to 2004, even though he received at least $5,696,574 in income, Rank wrote. He also said company employees were told by Beale and Stagni not to file normal payroll documents for Chayil with the IRS.

"It wasn't hidden from anyone," said Beale. "The accounting department knew what my income was. The government could have called me or written my company and found out what my income was."

Beale chose to represent himself in court. Motions he filed early in the case were rejected by U.S. District Judge Ann Montgomery shortly before the trial was to begin on Aug. 14, 2006. Such eleventh-hour rulings are not uncommon, but Beale said he was unprepared for them, and rather than seek a continuance, he fled. "I didn't believe I would get a fair trial," he said.

On the run

Beale said he moved in with a friend. The friend turned out to be Martin Chapman, a tax critic who had a mobile home near Balsam Lake, Wis. Officials raided it on Aug. 29, 2006, but Beale was gone. Chapman, who says he did not know Beale was a fugitive, was not charged.

Beale said he moved in with "someone else" -- he won't say who -- and stayed in the Twin Cities area until that following Christmas, researching his tax case.

"I rode my bicycle and I went jogging daily," he said. One weekend while riding his bike, he said, he stopped at a fruit stand, and a man at the stand sold him some watermelon and told Beale he was a full-time police officer. "I just decided to eat quickly and be gone," Beale said.

Around Christmas, he said, he moved to Orlando, Fla., rented a room under another name and continued to work on his computer. He obtained false identification, he said. He declined to say where he got money to live on.

During this period, he said, he made a couple of trips by plane -- one to attend a tax seminar in New York-- and also took a one-week cruise to the Bahamas, which he called "just a vacation."

He said he made a "really dumb mistake" using the same cell phone for 11 months.

"I started calling my family," he says. "My ex-wife found out I was making these calls and she called the police. They subpoenaed the phone records from family... and found out where I was calling from."

He was arrested without incident in the parking lot of an Office Depot in Orlando on Nov. 1.

Beale was originally supposed to stand trial with Lee Stagni, Comtrol's ex-president, who was charged with helping Beale evade taxes. Stagni was convicted of aiding Beale and sentenced to three years and seven months in prison.

"I thought he was totally innocent," said Beale. "He was just doing what I told him."

In the meantime, problems were multiplying at his company. In an affidavit filed in Hennepin County District Court in May, Bradford Beale, another of his four sons and vice president of Comtrol, said many company decisions couldn't be made because his father was a fugitive.

Comtrol's bank terminated the company's line of credit. The court removed Robert Beale as CEO. Beale's personal life was also in a shambles. Even before he fled, Rebecca Beale, his wife of 40 years, who had tried to dissuade him from battling the IRS, left him and moved to Florida.

After he disappeared, she divorced him and initiated a separate legal case against him in Ramsey County District Court to obtain his assets, accusing him of attempting to create illegal trusts and an illegal corporation to hide income and property and to defraud the U.S. government. She also claimed he had gold and other funds valued at more than $775,000 in Swiss banks.

The courts stripped him of his $5.6 million in Comtrol stock, the couple's $1.9 million home in Naples, Fla., and $2 million home in North Oaks, awarding it all to his wife. Court papers say she will have to pay about $2.5 million to the IRS in tax, penalties and interest.

Theodore Beale said the Swiss accounts, long since depleted, were set up years ago when his parents considered moving to Switzerland. Beale's ex-wife and her lawyers could not be reached for comment.

'Going to be a hero'

Beale said he had no money and can't hire his own lawyer. He said he'll represent himself at trial, although the court has appointed a lawyer, Dean Grau, as "standby counsel."

Dan Pilla, a Stillwater tax litigation consultant, said that the views of tax protester Schiff are "nonsense," but that Beale might be able to convince a jury that he believed Schiff's writings and that he acted in good faith when he failed to pay income taxes. Such jury decisions are rare but do happen, he said.

"He has something that is going to hurt him bad, and that's the fact that he ran," Pilla said. Prosecutors will argue it proves he knew he was wrong.

Dan Scott, Beale's former stand-by attorney, said Beale could get 9 to 12 years in prison under U.S. guidelines.

From jail in Elk River, Beale said he is struggling to assemble his case. No date has been set for the trial.

"The saddest part of the story is I thought I was going to be a hero, not a pariah," he said. "I wish I could turn the clock back. ..."

Staff researcher Roberta Hovde contributed to this article. Randy Furst • 612-673-7382

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