Milton Street, tax resister

T. Milton Street Sr. took the witness stand in his own defense yesterday, telling a federal jury he paid his taxes until he became convinced the tax code is unconstitutional.

He also unabashedly admitted that he had sought to take advantage of the fact that his brother was mayor to win the consulting contracts that earned him millions.

"I was trying to function within the political environment, which is something that's been done in Philadelphia since the beginning of time," Street testified.

It was vintage Street, honed over 30 years of street theater, a stint in the state legislature, and being a full-time political iconoclast: amiable and aggressive, cheeky and self-deprecating, and, as usual, armed with the unexpected.

New to the arsenal: tax resister.

Street, 68, of Moorestown, testified for almost two hours, mostly being interrogated by Assistant U.S. Attorney Jennifer Arbittier Williams.

Questioned by Williams about why he did not file federal income-tax returns in 2002, 2003 and 2004, Street testified that he relied on his accountant.

He said he gave his accountant power of attorney, left the tax returns for him to figure out, and never bothered reading or signing them.

Then, Street said, he stopped even worrying about the accountant. He launched into a long digression about the U.S. Tax Code, its legislative history, and its interpretation by the Supreme Court. Street's conclusion was that it was unconstitutional.

"If you find it" - referring to a statutory basis for the tax code - "look it up for me and I'll plead guilty to all these charges," an animated Street challenged Williams.

When Williams persisted, Street talked about the tax loophole he said he found, known as the "missing OMB control number." It's a defense that has been tried by tax resisters - periodically and unsuccessfully - at least since the 1980s.

Basically, the theory goes that, because some IRS forms and instruction booklets do not carry a control number from the Office of Management Budget as required by the Paperwork Reduction Act, a citizen may ignore the rule that requires filing a federal tax return.

Williams returned to her questions and Street kept filibustering with his tax research, finally saying, "Miss, why can't you just show me the law so I can plead guilty?"

"Let's take five minutes," interrupted U.S. District Judge Legrome D. Davis. Then, outside the jury's presence, Davis quietly but firmly instructed a grinning Street about court procedure and told him that his comments about pleading guilty were "not fair" to a jury hearing evidence in a trial he wanted.

"Any other questions?" Davis asked Street.

"Just, could you put some ice into this water?" Street replied, motioning to the pitcher before him.

Davis explained that, at a recent holiday get-together in his chambers, he learned "there is not a single ice maker in this building. I had to go out and buy some. Do you want me . . . to go out and buy some?"

No, Street said.

Federal prosecutors have accused Street of earning hundreds of thousands of dollars doing nothing more than selling his name and perceived influence with the administration of his brother, the mayor.

Street insisted he did work for the money, but he candidly admitted he had told associates that his brother's election was a windfall but that "I have a very small window in which to make real money."

"This is just business," Street repeated to Williams' questions.

Yesterday marked the end of the prosecution case against Street and codefendant John H. Velardi Sr. after five days of testimony.

After Street testified, the defense case took just 30 minutes. Defense attorney Guy Sciolla said Velardi opted not to testify and then called seven character witnesses, including Velardi's brother and father, to testify about his reputation for honesty.

Because the judge said he did not want to divide closing arguments and his jury instructions in the law over the three-day Presidents' Day weekend, the trial will resume Tuesday, with the jury possibly beginning deliberations late in the afternoon.

The indictment against Street alleges that he failed to pay taxes on $2 million in consulting fees and income not derived from his $30,000-a-year food-vending business between 2000 and 2004, and that he failed to even file a tax return in 2002, 2003 and 2004.

In addition to the tax charges, Street and Velardi, 54, of Media, are charged with wire and mail fraud in what prosecutors say was a 2003 scheme to defraud a Vietnamese businessman of $80,000 by selling him the rights to a $3.2 million airport maintenance subcontract that Street and Velardi knew did not exist.

Witnesses testified that Street and Velardi wanted to assign the airport subcontract to Thanh Nguyen and his V-Tech Services Inc. to recoup money Street owed Velardi's employer, Philadelphia Airport Services, the main maintenance contractor at the airport.

But prosecutors contend that the rights to the subcontract between PAS and Street's Notlim Inc. were no longer Street's to sell.

In June 2003, airport officials canceled the Notlim subcontract after Mayor John F. Street ordered his older brother to withdraw from the deal because it appeared inappropriate. Prosecutors say the ex-mayor was not involved in his brother's alleged crimes. John Street has not attended the trial.

Nguyen testified Monday that after he paid Street $80,000, the subcontract assignment kept being postponed and Street and Velardi stopped returning his calls.

Yesterday, Street testified that negotiations with Nguyen were legitimate because he was "optimistic" PAS would eventually allow Notlim to assign the subcontract to V-Tech. The $80,000, Street said, was Nguyen's idea - good-faith money to stay in the game.

Street also maintained that Velardi played no part in the talks between him and Nguyen, though Street's former son-in-law testified earlier that Velardi was present at a November 2003 meeting with Street and Nguyen that he also attended.

Williams ran down a list of government witnesses who testified about the alleged fraud scheme.

To each name, Street responded: "Liar."

For an excerpt from T. Milton Street Sr.'s testimony yesterday and documents in his federal fraud trial, go to http://go.philly.com/

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