Once a gadfly, now getting stung by feds

Victor M. Crown once was known for being a thorn in the side of many Illinois politicians with the exposes he published in his newsletter, “Illinois Politics.”

Now, Crown is getting stung — by the federal government.

In a court ruling late last week, a federal judge barred Crown, who is a federal tax preparer, from handling any more tax returns, other than for himself.

The government alleged that Crown engaged in two schemes in preparing about 2,900 fraudulent tax returns, many for City of Chicago employees.

In the first scheme, Crown inflated the amount of tax withheld from his city workers’ paychecks, claiming that the City of Chicago withheld the wrong amount, the feds say.

In the second, the government alleges that Crown falsely claimed that some customers who had received awards as part of the Shakman class-action lawsuit settlement could claim net-operating losses on their tax returns. The Shakman lawsuit alleged the City of Chicago routinely hired or promoted city employees based on politics, and a fund was established to make pay outs to effected workers. Crown essentially argued that if a city employee put in a claim to the Shakman settlement fund for $100,000, but only got $10,000, that person could claim a deductible net operation loss equal to $90,000 on their taxes, the feds say. The IRS, not surprisingly, disagreed.

The government also alleged that Crown continued to engage in the schemes even after IRS agents told him that his tax claims were frivolous.

Crown and his investigative work was the subject of new stories decades ago.

He was dubbed a “maverick muckraker” in a 1998 article in the Chicago Reader,

As part of the court order last week issued by U.S. District Judge James Zagel, Crown is required to provide a full list of his customers since 2010 to the government and notify his customers of the court’s findings against him.

Crown declined to comment on the government allegations.