The founder of Hooters gets emotional in testimony about his onetime "confidant' and close friend.
By KEVIN GRAHAM
Published November 11, 2005
TAMPA - When Lynn "L.D." Stewart's defense attorney asked him to talk about his accountant and longtime friend Michael Maricle in federal court Thursday morning, the Hooters founder hung his head and choked back tears.
"All I can say is, to sit here like I did last week and listen to a man say he stole about a million dollars from me," Stewart said, pushing away from the microphone on the witness stand. "I just don't know what to think."
Stewart called Maricle his "confidant," the godfather to one of his sons. Now when Maricle's name comes up, he's labeled a thief.
A jury must decide whether Stewart conspired with Maricle to defraud the U.S. government. The Internal Revenue Service says Stewart owes about $4-million more in income taxes than he paid in 1997 and 1998. The government has accused Stewart of failing to report $11-million in income during those two years, which he earned by selling his stock and ownership in Hooters Inc. The 62-year-old entrepreneur faces two counts of tax evasion and two counts of filing false tax returns.
Stewart testified for a second day on his own behalf in U.S. District Judge Susan Bucklew's courtroom. During cross examination, federal prosecutor Jay Hoffer tried to use Stewart's testimony to paint a picture of a man with a history of being involved with every aspect of his personal and professional business.
Hoffer presented page after page of legal documents to Stewart and asked whether he remembered how involved he was in drafting them. For many of the documents, Stewart said he couldn't recall the details.
At least one major document in the case against Stewart has caused him to doubt whether he's the one who signed it at all: his 1997 tax return. It didn't look like his writing.
"Mike Maricle could have signed it for me," Stewart said. "And I wouldn't have been upset if he did. He had that authority."
The IRS raided the offices at Maricle's accounting firm in March 2000. In 2003, he pleaded guilty to two counts of helping prepare and file false tax returns and was sentenced to 30 months in prison. He hasn't yet served his sentence.
Stewart said he relied completely on Maricle when it came to his financial transactions. During the mid 1990s, Maricle persuaded Stewart to transfer his assets into common law business organizations, designed to aid in estate planning.
Stewart's home, automobiles, boats and Hooters settlement money went into these various trusts. Maricle would use money in the trusts to pay for the Stewart family's monthly bills and living expenses.
Stewart said Maricle told him he could have zero tax liability if he funneled all his money into a charitable trust and lived out of that. Stewart and his wife, Juanita, would be listed as directors. As such, they'd be entitled to a salary, cars and - since they would use their home as an office - the charitable trust would pay their mortgage.
"I refused to go along with this part of the system," Stewart said. He said he insisted that Maricle use his family's annual expenditures - entertainment, travel, living costs - as their tax base and report it on their income tax.
In 1998, Stewart wrote Maricle a letter asking for the trust system to be reviewed by a tax expert to establish that everything was in "100 percent compliance with local, state, federal and international laws." Maricle arranged a meeting with Texas lawyer Joe Izen, who agreed that things looked to be in order.
Closing arguments in the case begin Monday at 8:30 a.m. Bucklew said the jury should begin deliberations by lunchtime.
If convicted, Stewart faces up to five years in prison on each tax evasion charge and another three years for each false income tax return claim - up to 16 years total. He also could be fined up to $250,000 per charge.
