Republican John Anthony Castro is initiating legal action against Clarence Thomas, alleging that the U.S. Supreme Court associate justice neglected to submit his income tax returns.
Guilty of Tax Fraud?
Castro, a dark horse in the Republican presidential race and a seasoned tax attorney who has filed several lawsuits to exclude former President Donald Trump from the GOP primary, disclosed to Newsweek his plans to bring a case against Thomas in a Virginia court under the Virginia Fraud Against Taxpayers Act (VFATA).
Countdown to Court’s Decision
He dispatched the complaint to the court last Friday, anticipating a two-business-day processing time for the court to officially register the case.
Allegations Surface
The complaint, as per the copy Newsweek received, claims that under VFATA, “Clarence Thomas knowingly presented or caused to be presented a false and fraudulent claim (i.e., his 2005 Virginia State Income Tax Return) to the Virginia Department of Taxation on or about April 15, 2016, that failed to report income from discharge of indebtedness.”
Undisclosed Financial Dealings
Thomas has been under heavy scrutiny and faced demands for his resignation after reports surfaced that he failed to disclose several financial dealings, including a $267,230 loan from his affluent friend Anthony Welters.
Unpaid Loans and Tax Reporting Issues
A Senate Finance Committee investigation last year uncovered that Thomas hadn’t repaid a significant part of this loan, sparking concerns about his tax reporting accuracy.
The Tax Code Section 108
Castro, spurred by these revelations, delved into federal and state tax regulations. He shared, “Under Section 108 of the Internal Revenue Code, he would have had a legal obligation to report [the loan] as taxable income and the tax alone would have been, probably $40,000 or $50,000. That’s a third of his annual salary.”
“And that’s when I was like, ‘There’s no way he reported that because that’d be financially disastrous for him.'”
VFATA: Castro’s Weapon Against Thomas
Castro is suing Thomas under VFATA, a law enabling private citizens to act as de facto Virginia attorney general agents, allowing them to pursue claims against Virginia residents for making fraudulent financial claims to the state.
Rewards and Protections
The VFATA mirrors the federal False Claims Act by rewarding and protecting those who report state government fraud. Under VFATA, anyone submitting fraudulent claims to Virginia faces triple damages and penalties.
A Tool for Fighting State Fraud
The law also strongly protects whistleblowers from retaliation, echoing the federal FCA’s goals of reclaiming lost government funds and encouraging reporting of fraud.
“It basically allows you to bring a tax enforcement action against a taxpayer,” Castro said of the VFATA.
Delayed Lawsuit Strategy
Castro revealed he initially intended to file the lawsuit last year but alleges that Trump collaborated with the IRS to retaliate against his efforts, which he claims undermined the Trump Administration’s political goals.
A Battle of Accusations
“Right when I’m going to level these accusations against Clarence Thomas for filing false and fraudulent returns, what happens to me? I get accused of false and fraudulent returns,” Castro explained.
Alleged Undermining of Credibility
He believes this was a deliberate strategy to undermine his credibility: “They intentionally devised this plan of, ‘Let’s accuse him of what he’s about to accuse Clarence Thomas of, it’s going to completely discredit him. And if he brings this claim, nobody’s going to believe him.”
“But, of course, I still want to go forward with it.”
Legal Integrity Over Party Loyalty
When questioned about whether his lawsuits against Thomas and Trump might cast doubts on his conservative credentials, Castro affirmed his Republican identity, emphasizing his commitment to legal principles.
Holding Lawbreakers Accountable
“I’m a very, very stubbornly principled person and if I feel that somebody broke the law, I’m going to hold them accountable,” he asserted.
“Just like Trump for January 6 and Clarence Thomas for this sham loan.”
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