Federal agents on Friday seized documents and records at the Anaheim offices of a tax preparer and investment counselor who allegedly controlled 75 fraudulent investment partnerships involving California gold mines, Jerusalem-artichoke farms, land in Wyoming, pigs, cattle and a resort near Yellowstone National Park.
Internal Revenue Service and U.S. Postal Inspection Service agents served a search warrant on Leslie (Bill) Hawkey, owner of Hawkey Income Tax and Investments, as he arrived at his storefront office early Friday morning.
Many Orange County residents were among those who invested millions of dollars, each paying between $10,000 and $100,000 for interests in the partnerships, which offered various tax benefits, according to postal service agents.
Investor complaints to the Anaheim Police Department prompted an investigation that led to the search warrants issued to seize records from Hawkey's office at 620 W. La Palma Ave. The warrants were issued earlier this week by Ronald W. Rose, a Tustin attorney who serves as a U.S. magistrate.
"This was a total surprise," said Hawkey, a stout, middle-aged man with a gray crew cut. He was surrounded by federal agents sorting through files before loading them into cardboard boxes and onto a waiting truck. "I got here and they (the agents) were here en masse."
No Arrests, No Charges
The seizure does not stop Hawkey from operating his firm, which is sandwiched between a shoe repair shop and a doughnut store in a run-down shopping center. Hawkey said, however, that without his investment and tax records, he cannot operate his business.
There were no arrests and no criminal charges were filed.
Search warrants were also issued for Hawkey's storage space at 454 W. Anaheim Blvd. and the VIP Realty Co. in Gillette, Wyo., a business operated by Hawkey's son, Leslie (Biff) Hawkey Jr. The partnerships were allegedly created by the younger Hawkey, who is an attorney, according to federal agents. A woman answering the phone at Biff Hawkey's office Friday said he could not be reached for comment.
"Investors were induced to invest in the partnerships by relying on representations relating to interest rates, profit potential, tax shelter benefits and buy-backs which are alleged to have been false and fictitious," according to Postal Inspection Service officials. "I've been audited by the IRS five times in the last five years (as a result of his investments through Hawkey)," said an Anaheim man who arrived at Hawkey's office carrying a $9,000 tax bill from the IRS. The man, who was interviewed on the condition that his identity remain anonymous, said he was on his way to discuss his IRS bill with Hawkey.
According to the IRS documents he had, the government wants $9,000 plus interest because his 1980 investment in a California gold mine is being disallowed. The man said he is a general contractor and has relied on Hawkey to prepare his tax forms for 23 years. He said he invested in the partnerships because he was tired of paying 50% of his income in taxes.
Hawkey declined to comment on the kind of investments he offered. Hawkey, who said he is not an accountant, said he had been at the same Anaheim location for 18 years. While the agents searched his office, Hawkey answered repeated telephone calls, asking callers to call back Monday. He was given permission to copy some documents before they were packed away.
Postal service inspector Gary Jones said the confiscated records would be reviewed and, based on their contents, indictments or arrest warrants might be issued. He said the Postal Inspection Service was involved because the U.S. mails might have been used to commit fraud. Jones said the IRS was involved because tax returns were involved.
A young woman working at the doughnut store next to Hawkey's business said she worked briefly for Hawkey during April.
"His daughters . . . ran the business," said the woman, who asked not to be identified. "He wasn't there that often."
She said Hawkey dressed modestly and drove a "beat-up Plymouth" while the women she identified as Hawkey's daughters drove a silver Corvette and a Mercedes convertible. Federal agents declined to comment on whether Hawkey's daughters were involved.