Hooters founder freed of charges
After a mistrial, the government decides not to reprosecute. But the IRS could file a civil lawsuit.
By JENNIFER LIBERTO
Published January 27, 2006
TAMPA - The man who made millions with a winning combination of chicken, beer and women in tight T-shirts does not have to worry about spending time behind bars over failing to pay enough taxes.
The U.S. Attorney's Office said Thursday it is officially dropping the criminal case against Hooters founder Lynn "L.D." Stewart who weathered a three-week trial on federal tax evasion charges in November that ended in a mistrial.
Federal prosecutors asked the judge to approve their request to dismiss charges against Stewart due to the "present unlikelihood of success in a retrial of the instant charges."
Jurors told the Times after the trial they were split down the middle, with half in favor of conviction and the other half voting not guilty.
"This was a complex tax shelter case, in which Mr. Stewart relied on the advice of his accountant and other tax experts," said Stewart's attorney, John Fitzgibbons. "He is pleased that this five-year ordeal is finally over."
U.S. Attorney's Office spokesman Steve Cole said prosecutors had asked to get approval from the tax division of the Justice Department before they could dismiss the charges.
"We did get that approval, and we filed for dismissal," Cole said.
Several jurors said after the trial that their biggest problem with the case was the government's key witness, Stewart's accountant, who lacked credibility.
During the trial, the accountant, Michael Maricle, admitted stealing nearly $1-million from Stewart and hadn't revealed the theft in its entirety to prosecutors.
Stewart was charged with two counts of filing false tax returns and two counts of tax evasion. All the criminal charges are now over.
Stewart was out on bail during the duration of the criminal case but could have been sentenced to 16 years in prison if he had been convicted of all charges.
The Internal Revenue Service had said Stewart owed about $4-million more than he paid in 1997 and 1998. He was accused of failing to report $11-million in income over those two years, which was earned through selling his stock and ownership in Hooters Inc.
An IRS spokesman told the Times in November that federal officials were considering filing a civil lawsuit against Stewart to recoup that money. They've yet to file a civil complaint, and efforts to reach them late Thursday were unsuccessful.
Stewart maintained during his trial that he didn't know that Maricle had done anything illegal in hiding the money in offshore trusts. Another man, William Tiner, who also had invested in the same offshore scheme, was convicted and is serving a five-year prison sentence.
The U.S. Attorney's Office wouldn't say if it planned to prosecute Maricle for theft, since that information appeared to have affected the case against Stewart.
The government's decision in Stewart's case is a sharp contrast to its response to the more politically charged case of former University of South Florida professor Sami Al-Arian, whose six-month trial ended in a mistrial on nine charges. Al-Arian was acquitted of the other eight charges.
In that case, jurors told the Times that 10 of 12 jurors voted not guilty, but the U.S. Attorney's Office continues to move toward reprosecuting the case.