Joe Armstrong

New TNJ edition alert: Mugwumps, vouchers, and the death a player in the Rocky Top bingo scandal

The Tennessee Supreme Court building is seen in Nashville on Dec. 8, 2021. (Erik Schelzig, Tennessee Journal)

The latest print edition of The Tenenssee Journal is out. Here is what’s in it:

— Revenge of the mugwumps? Party purity tests dog Republicans.

— From the courts: Nashville asks Supreme Court for redo on school voucher decision, $1M price tag for robocalls in mayoral recall effort.

— Political roundup: Harwell endorsed by anti-abortion group as poll tests lines of attack.

— Obituary: Former state Sen. Jim Lewis, top bingo advocate before FBI’s Rocky Top crackdown.

Also: Tax conviction may cost Joe Armstrong his radio license, Jack Johnson is getting ready for BBQ & Beans fundraiser, the TBI is taking applications for director, and a deep dive into what languages Tennesseans command.

As always, access the your copy of the TNJ here.

Or subscribe here.

Programming note: The Tennessee Journal is on summer break next week. We will be back with a new edition on June 17.

Feds file $140K lien against former Rep. Joe Armstrong’s property

The federal government has filed a $140,000 lien against property owned by former state Rep. Joe Armstrong to collect fees and restitution in his criminal tax case, reports the News Sentinel.

The lien includes any property Armstrong owns, according to Nick McBride with the Knox County Register of Deeds. Property records show that in addition to his $426,200 Holston Hills home, Armstrong owns a Selma Avenue house worth $34,900 and co-owns a $6,000 parcel on Plymouth Street.

The lien was filed Feb. 2, one week after a judge ordered Armstrong to pay a $40,000 fine and $100,000 in unpaid taxes to the Internal Revenue Service for filing a false tax return.

McBride said liens for restitution and fines are not uncommon in court cases like this.

When asked Tuesday if he had made any payments on his fines and restitution, Armstrong declined to answer.

No jail time for former Rep. Joe Armstrong

A federal judge on Wednesday spared former state Rep. Joe Armstrong from a prison term, calling his failure to pay taxes on a windfall from a sin tax hike aberrant behavior in an otherwise “exemplary” life, reports the News Sentinel.

Senior U.S. District Judge Thomas Phillips ordered Armstrong to spend six months under house arrest and perform 300 hours of community service.

He will be on probation for three years and must pay a $40,000 fine, repay the IRS nearly $100,000 in unpaid taxes and an undetermined figure to cover the government’s cost of prosecuting him.

“It was essentially an isolated incident,” Phillips said. “Until this occurred, (Armstrong) has led an exemplary life.”

Armstrong failed to tell the IRS he made a windfall of $321,000 in an under-the-table deal to profit from a boost in a sin tax for which he voted in 2007.

Phillips took direct aim at the Tennessee Legislature for allowing lawmakers to profit from legislation they vote to approve. The judge agreed what Armstrong – and many other legislators – did in profiteering courtesy of a favorable vote wasn’t a crime, but Phillips said it was criminal nonetheless.

“In this court’s opinion, it was unethical and immoral, but not illegal,” he said.

Armstrong, a Democrat who represented East Knoxville’s 15th District for nearly three decades, was convicted last year of filing a false income tax return in connection with a deal he struck with Knoxville tobacco wholesaler Tru Wholesale to buy cigarette tax stamps for him at the 2006 rate of 20 cents per pack and then sell them after a 42-cent hike went into effect in 2007. Armstrong voted for the tax hike.

Judge leaves probation as a possibility for former Rep. Armstrong

A federal judge in Knoxville has ruled in former state Rep. Joe Armstrong’s favor on legal issues involving the sentence he faces following a conviction for filing a false income tax report, according to the News-Sentinel. The upshot: He faces lighter punishment than would have been possible had the judge adopted the prosecution’s arguments and his attorney, Gregory Isaacs, will get the chance to argue for probation when he appears in federal court for sentencing on Jan. 25.

A federal jury found Armstrong, a Democrat who represented East Knoxville’s 15th District for nearly 30 years, guilty in August of filing a false tax return, a felony. The longtime legislator failed to report or pay taxes on a $321,000 profit from selling cigarette tax stamps in 2008.

Assistant U.S. attorneys Charles Atchley and Frank Dale want prison time for Armstrong and initially sought a sentence of three years, the maximum under federal law.

 Senior U.S. District Judge Thomas Phillips wrote in an opinion filed Wednesday that the U.S. Probation Office has calculated Armstrong’s penalty range at a lower amount under the guidelines used to determine sentencing throughout the federal court system. The judge also ruled Armstrong, who had no criminal record prior to his conviction, should be held responsible for a lesser amount of money lost in potential taxes and that prosecutors failed to show he lied under oath during his trial.

The ruling translates to a potential sentence of 15-21 months, or less than two years, under sentencing guidelines. The judge also declined to rule out the possibility of probation.

“The court will consider the defendant’s arguments regarding an appropriate sentence … at the sentencing hearing,” Phillips wrote.

Ministers, civic leaders, politicians urge probation, not prison, for Armstrong

Former state Rep. Joe Armstrong will bring church, community and politics with him next month when he stands before a federal judge and tries to stay out of prison, reports the News Sentinel.

Armstrong’s attorney, Gregory P. Isaacs, has filed 55 letters of support for the veteran legislator and leader in the black community in the run-up to a January sentencing hearing on the filing a false tax return conviction Armstrong suffered in August. The authors of the letters are tied to Armstrong in one of three ways – church, community service and his political career. The list includes ministers, civic leaders and business owners, including William Kouns, the co-founder of Jewelry TV, and politicians, including state Sen. Reginald Tate, state Rep. Larry Miller and Knox County Mayor Tim Burchett.

Filings by Isaacs and Assistant U.S. Attorney Frank Dale show the penalty range for Armstrong could be as low as 15 months or as high as 41 months. That gap will be the subject of a separate legal battle that will take place later this month before Senior U.S. District Judge Thomas Phillips.

…Dale wants Armstrong to go to prison for three years….”Those who choose to serve as elected representatives are uniquely obligated to obey the law, since their actions are always under public scrutiny,” Dale wrote.  “Allowing Armstrong to face anything less than a (three-year) sentence would send a particularly negative message to the public, that politicians can break the law without facing any significant consequences.”

…Isaacs is pushing to lower the penalty range itself because the lower the potential sentence, the more comfortable a judge feels in granting probation… Isaacs also argues Armstrong’s crime was “aberrant behavior,” and not something he has done before or will do again.

“It is undisputed that Mr. Armstrong has led an otherwise law-abiding lifestyle, with no criminal history whatsoever and actually a remarkable history of civic service and community involvement,” Isaacs wrote.

Armstrong sentencing delayed until Jan. 25

A sentencing hearing for former state Rep. Joe Armstrong, originally scheduled for Nov. 30, has been postponed until Jan. 25 by U.S. District Judge Thomas Phillips, reports the News Sentinel.

A separate hearing is set for Dec. 12, when the judge will hear arguments from the prosecutors and defense attorney Gregory Issacs over the contents of a report prepared by the U.S. Probation Office that will have considerable impact on Armstrong’s sentence. The report is being kept confidential insofar as the public goes.

Armstrong, a 28-year veteran of the Legislature, was convicted in U.S. District Court in August of filing an income tax return that made no mention of the $321,000 windfall he made when he used Knoxville tobacco wholesaler Tru Wholesale to buy cigarette tax stamps for him at the 2006 rate of 20 cents per pack and then sell them after a 42-cent hike went into effect in 2007. Armstrong voted for the tax hike.

Failing to file a false tax return carries a maximum three-year prison term, but in the federal system those “statutory maximums” are often practically useless, a worst-case scenario rarely imposed. The true penalty range is determined via a mathematical formula laid out in federal sentencing guidelines that look to a defendant’s prior criminal history, the level and type of crime, and his or her specific role and behavior in the crime at issue.

Armstrong has no criminal history. The crime itself is low on the guidelines’ totem pole. He likely is eligible for probation, which Isaacs has made clear in post-trial interviews he will seek. (Assistant U.S. Attormey Charles) Atchley, on the other hand, has made it equally clear he wants Armstrong to go to prison.

The U.S. Probation Office is tasked with investigating all the factors that go into establishing a penalty range, and that office’s work is kept under seal throughout the case. Only the judge, the defendant and the prosecutor can see it. Armstrong’s penalty range is in that report, but it’s filed under seal so the public can’t see it. Both Atchley and Isaacs are attacking some portion of the report via motions filed in U.S. District Court but those, too, are being kept under seal.

Armstrong’s new trial motion rejected by judge

U.S. District Judge Thomas Phillips has rejected former state Rep.
Joe Armstrong’s bid for a new trial and scheduled sentencing for Nov. 30 on his felony conviction for filing a false federal income tax return, reports the News Sentinel.

The August conviction involved profits the veteran legislator made by buying state tobacco tax stamps before a cigarette tax increase that he supported, then selling them after the 2007 tax hike became law. Armstrong contended his accountant misled him into believing the taxes had been paid.

But Phillips said Armstrong’s own testimony provided proof he knew the windfall must be included on his taxes – in whatever form, whether income or capital gains – but signed the document knowing it wasn’t included.

“(Armstrong) admitted that the profit was income to him, it was not included on his 2008 income tax return and it should have been,” Phillips wrote. “He acknowledged that he could not report his income on the tax return of another person. Thus, the jury was presented with the defendant’s own testimony that the tax stamp profit was his income, and he did not report it.”

Armstrong is expected to appeal the conviction further. He faces a maximum of three years in prison when sentenced.


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