Late grower's tax avoidance is costing family

By Michael Doyle
mdoyle@mcclatchydc.com

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WASHINGTON � Cloyd F. Angle had a plan to avoid paying taxes. Unfortunately for the family of the late Hughson almond farmer, it didn't work out too well.

Now, Angle's estate owes more than $2 million in unpaid taxes as well as several hundred thousand dollars in penalties. Family members also must face an unflattering portrait of the one-time Cal-Almond patriarch in a federal judge's ruling.

On Monday, U.S. Tax Court Judge Mark V. Holmes dismissed claims filed on behalf of Angle's estate and his widow, Bonnie Angle. The judge did not hide his disdain for the tax-shelter effort that included offshore accounts, a proposed renunciation of U.S. citizenship and "magic" and "convoluted" transactions.

"Back in the real world," Holmes wrote at one point, after a description of Angle's tax-shelter plan.

Telephone and e-mail attempts to reach three of the attorneys who have represented the Angle estate were unsuccessful Tuesday. Two of those attorneys formally withdrew from the case after a 2005 trial.

From his ranch in Hughson, Angle built a remarkably successful business. Incorporated in the 1970s, Cal-Almond by the mid-1990s was processing about 25,000 tons of almonds annually. This was nearly 10 percent of the San Joaquin Valley's total, making Cal-Almond one of the top U.S. almond processors.

By 1994, Angle's son Tyler owned 51 percent of the company. Though Cloyd Angle owned the other 49 percent, his participation in company affairs had withered.

"Cloyd wanted out � but only if he could get enough money," Holmes noted in a 22-page opinion.

Enter Virginia-based Morven Partners, which was trying to expand its already large nut business. Angle told a Cal-Almond executive that he would fend off Morven's feelers by "throwing out a number that they wouldn't accept."

Instead, Morven Partners quickly agreed by October 1994 to buy Cal-Almond for $20 million.

"Cloyd's only concern about selling the company was that he would have to pay taxes on whatever he received," Holmes wrote. "But then he spotted an advertisement for books and tapes on offshore tax planning by a man named Jerome Schneider in SkyMall, a mail-order catalog found in the backs of airplane seats."

Schneider was poorly educated but aggressive in promoting tax shelters. He eventually would plead guilty in 2004 to charges of conspiracy to defraud the United States, serving six months in prison and agreeing to testify against former clients.

Holmes wrote that Cloyd Angle "bit down hard on this lure" of tax shelters offered by Schneider.

The plan, Holmes explained, was to transfer Angle's Cal-Almond shares to offshore companies in exchange for a private annuity. Angle and his wife then would "renounce their American citizenship, and defer recognition of the gain from Cal-Almond's sale to Morven until it could be distributed tax free to an expatriated Cloyd in a country that didn't have an income tax."

Cloyd and Bonnie Angle later became citizens of St. Kitts and Nevis in the Caribbean, and later moved to Canada. In the British Virgin Islands, Angle picked two "off-the-shelf" corporations named Molseberry Ltd. and Padang Securities. Holmes noted the Angles selected these companies to which he would sell Cal-Almond stock "because he liked the names."

Morven Partners announced in 2002 that it would sell Cal-Almond. Cloyd Angle died in May 2004.

Holmes rejected the Angle estate's arguments that the family had reasonably relied on tax advice.

Consequently, the judge assessed a 20 percent "accuracy related" penalty on top of the $2 million-plus in taxes owed in the Cal-Almond sale.

Bee Washington Bureau reporter Michael Doyle can be reached at mdoyle@mcclatchydc.com or 202-383-0006.