Tax charges against 2 MMA grads dismissed

PORTLAND – A Superior Court justice has dismissed tax evasion charges against two Maine Maritime Academy graduates, ruling that the state’s definition of residency is unconstitutionally vague.

Justice Roland Cole on Tuesday threw out charges against Michael Falcone and James Jannetti, who were indicted last year for failure to pay income taxes and tax evasion between 1997 and 2002.

In a motion to dismiss, defense attorneys said the state’s definition of “domicile” was unclear, making tax decisions difficult for merchant mariners who spend months at sea and split time between different states when they come ashore.

Cole wrote in his 11-page decision that state tax instructions were not only unclear, but also gave incorrect information in at least one place.

“Taxpayers like Falcone received no help from the tax statutes, and little guidance from the Maine Revenue Service instructions,” Cole wrote.

The ruling could affect other Maine Maritime Academy graduates who have pending tax evasion charges against them, said Portland lawyer Thimi Mina, who represented Falcone and Jannetti.

“It’s unfortunate these cases were prosecuted to begin with,” Mina said.

The Attorney General’s Office is reviewing the ruling and could file an appeal.

“I expect that in the next few days we’ll make a decision,” said Jessica Maurer, special assistant attorney general.

In 2000, the Maine Revenue Services criminal investigation unit launched an initiative targeting income tax cheats who claimed they lived in New Hampshire and other states that don’t have income taxes.

The agency subpoenaed records of the Maine Maritime Academy alumni association, which represents nearly 7,000 graduates. The state then brought more than two dozen criminal charges against graduates or family members.

Many of those charged accepted plea agreements. As of 2003, 27 merchant mariners had collectively paid more than $1.38 million in restitution.

Cole’s ruling raises questions about whether it was proper for the Attorney General’s Office to bring criminal charges in the first place, said Jonathan Block, a Portland attorney who has represented other Maine Maritime graduates and the school’s alumni association.

“We have been arguing for a long time that the basis for these prosecutions was unconstitutional,” Block said.