Wednesday, July 3, 2013

Power Company To Mississippi Supremes: Tax Assessor's Demand For Our Customers' Business Records In Probe To Nab Bogus Homestead Exemption Claims Is "An Impermissible Fishing Expedition" & 'They're Trying To Use Us As The Charter Boat To Catch The Fraudulent Fish!'

In Madison County, Mississippi, the Madison County Journal reports:

  • Entergy Mississippi says it doesn't want to be used as an investigative arm of the government and is fighting Madison County's demand to turn over records on 25,000 ratepayers so the Tax Assessor can better police homestead exemption.

    The utility is calling Madison County's demand "a fishing expedition" in a case that's before the state Supreme Court.

    Entergy says Madison County "does not have specific evidence to suspect a single specific one of them (ratepayers) of engaging in homestead exemption fraud. No such authority does - or should - exist."

    Entergy says the government is trying to use the electric company.

    "Entergy Mississippi is a power company that works hard to bring reliable, affordable electricity to our customers," Joey Lee, communications manager, said.

    "We are not an investigative unit for various government entities and we object to what appears to be nothing more than a fishing expedition for the Madison County Tax Assessor's Office. They're trying to use Entergy as the charter boat to catch alleged fraud."

    Last September, Madison County Circuit Judge John Emfinger denied Entergy's request to quash a county grand jury subpoena, which sought to open the business records.

    Entergy appealed to the Mississippi Supreme Court.

    Both sides filed the last of the court briefs on May 31 and are now awaiting the high court's ruling.

    In court documents, Entergy attorney Linda Cooper of the Wise Carter firm in Jackson said the county is not targeting special individuals but all customers in the Madison area to see who may owe taxes.

    The county's subpoena request, the documents say, is "an impermissible fishing expedition that seeks confidential data for general inquiry purposes that are not based on probable cause as to a crime that may have been committed by any particular identifiable person or group of persons."

    According to briefs filed by Entergy, they believe the subpoenas should be quashed for multiple reasons.

    It states, among other arguments, "(Entergy's) customer information is subject to legal protection as confidential proprietary business information constituting a trade secret under Mississippi law. The Tax Assessor's attempt to use (Entergy) as an investigative arm of its office for purpose of civil tax enforcement is an abuse of process. The Tax Assessor's involvement constitutes an improper influence on grand jury proceedings."

    The briefs also argue that the Tax Assessor's office violates the state Constitution's separation of powers and that the subpoena is an invasion of privacy.

    Tax Assessor Gerald Barber said the information is needed for an ongoing fraud investigation into homeowners who rent their properties but still claim homestead exemption, which reduces the taxes paid to the county.

    "If they're not evading taxes, they have nothing to worry about," he said.

    District Attorney Michael Guest argues that for the last eight to nine months his office and Barber's have been investigating homestead exemption fraud that has recovered nearly $250,000 so far. They believe that access to the private utility records of Madison County citizens will allow them to continue to uncover cases of abuse.

    "A large number of people are actually renting that property," Guest said. "Unless the house is your primary residence, you're not entitled to (homestead exemption)."

    Guest said they presented the case to a county grand jury and they returned the indictment.

    At first, the authorities were looking for information for specific subdivisions - Lake Caroline, Deerfield and Ashbrooke. He said Entergy could not produce limited data to that effect so they went with the next best approach, which was by zip code.

    Barber said that there is possibly "millions" of dollars that haven't' and aren't being paid to the county and that every penny counts. The biggest fraudulent case so far was for over $14,000, but he said some coming out in the near future will be more than that.

    "People are committing felonies and misdemeanors depending on what level they're in," he said. "We have a problem in the rural, unincorporated areas."

    Barber said at first that Entergy appeared to be cooperative but have since gone on the defensive.

    "There's a misunderstanding I think that's being promoted behind the scenes by Entergy," he said. "We're only concerned with people who have filed homestead exemption applications. This is no different than the state of Mississippi looking at people's income tax returns (before beginning a procedure to revoke homestead)."

    When asked if he felt this was an intrusion on 4th Amendment rights limiting warrantless search and seizure, Guest and Barber said no.

    "I believe in the fact that the grand jury was informed of the investigation and there was testimony, the grand jury considered those matters when they returned their indictment," Guest said.

    "We tried to limit the information as best we could - to only residences within those particular geographic areas."

    Guest said one of the things a grand jury is charged with by the Legislature is the ongoing supervision to make sure monies owed to the county are properly collected.

    Barber echoed Guest's comments, saying this effort was led by a grand jury.

    "They made the decision upon our request," he said. "It kind of becomes a question about what do you want - a tax assessor to be aggressive about finding homestead fraud or to be passive. If you're waiting on everybody to be honest the good people lose. The bad people win."

    Entergy officials disagree.

    "We respect the law and want to see those breaking it prosecuted and will cooperate with investigations as much as possible pursuant to court order," Lee said. "If the grand jury has identified possible individuals or specific addresses that it suspects may be committing fraud, we are ready, willing and able to provide them with appropriately court ordered customer information.

    "With all due respect to those involved and their efforts to curb fraud, we object to being used as a de facto general investigative arm of the tax assessor's office," he continued.

    "We believe it's our responsibility to our customers to keep their information confidential, to the greatest extent possible. We are the only electricity provider available to these customers and to receive service from us, customers have to provide us with certain information. We take seriously the confidential nature of our customers' information and will not divulge information without good cause, and pursuant to a court order."

    If the state supreme court affirms the lower court's ruling then the grand jury will receive those records and turn them over to Barber's office, where they will be used in the ongoing fraud investigation.

    In the most extreme cases, homestead fraud can result in a criminal felony charge, punishable by a fine of up to $5,000 and two years imprisonment, or both.
For the story, see Assessor demands records.

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