Armstrong testimony: Deceived by lying accountant

From the News Sentinel
After nearly three hours on the witness stand Friday, State Rep. Joe Armstrong ended his testimony where his defense began four days earlier — he trusted an accountant who turned out to be a liar and a thief.

Armstrong testified in his own defense Friday in U.S. District Court where he is standing trial on charges he conspired with his longtime accountant, Charles Stivers, to cheat the IRS and hide from the public a windfall he made from a sin tax hike for which he voted.

Armstrong has maintained since the trial’s start Stivers, a confessed liar and thief, assured him taxes on the $321,000 windfall from a deal involving a 2007 cigarette tax stamp hike had been paid but instead stole the money. He repeated that assertion in both his direct testimony under questioning by defense attorney Gregory P. Isaacs and cross-examination by Assistant U.S. Attorney Charles Atchley Friday.

“Mr. Atchley, Mr. Stivers was my tax attorney,” Armstrong testified. “I believed in him. I’m telling you, I relied on Mr. Stivers.”

Armstrong began his testimony with an autobiography of a native Knoxville resident who worked to put himself through the University of Tennessee. His interest in politics began at age 23, when he worked for a local radio station and rubbed elbows with politicians. He was the first Democrat to win a slot as vice chairman of the Knox County Commission and has served in the state Legislature for 28 years. He is a married father of four.

“This is my 14th term,” he said, noting he won his primary as an unopposed candidate on Thursday, a day he spent in court.

Armstrong readily admitted he made a deal with the owners of a Knoxville tobacco wholesale firm to buy cigarette tax stamps before a 42-cent hike went into effect and earned a profit once the stamps were sold. He insisted there was nothing unusual about that. Nearly all lawmakers are employed outside the Legislature and often vote on bills that could enrich them, he said.

“You’ve got people in the Legislature from all walks of life,” he said. “The General Assembly touches every aspect of our lives.”

He conceded he did not list the investment on a financial disclosure form. He called it a “mistake,” attributable to the newness of the form itself, which he said was put into use in paper form in 2006 and electronically in 2007. He pointed out he cited a House rule signaling a conflict of interest when he voted in a subcommittee on the bill, though the rule number he cited referenced family members serving as lobbyists.

“The numbers change every year,” he said.

He noted his name appeared on loan documents for his $250,000 investment in cigarette tax stamps along with a description of the investment itself, that the bank’s board of directors all were notified of the loan and a public record filed with the state in reference to it. The stamps served as collateral.

Armstrong’s demeanor was relaxed, and that did not change during cross-examination. There was one moment, however, when the lawmaker paused several seconds before answering a question from Atchley that seemed to catch him off guard.

The question?

“You did not want to share this money with your wife, did you?” Atchley asked, suggesting a new motive for Armstrong’s alleged tax evasion.

Isaacs objected. Senior Judge Thomas Phillips held a discussion with Isaacs and prosecutors at the bench which could not be heard by jurors or spectators. Atchley did not repeat the question when he returned to the podium. Armstrong’s wife has been in the courtroom throughout the trial.