State: No Record Found of Mayor's '92 Tax Returns

Raising the possibility of scandal in the Cambridge mayor's office, the Massachusetts Department of Revenue (DOR) indicated yesterday that it will begin an inquiry into whether Mayor Kenneth E. Reeves '72 paid state income taxes in 1992.

A DOR official said the agency has no record that Reeves filed a 1992 state tax return.

"The department shows no record for the taxpayer given his name, address and social security number, for the 1992 tax returns," Catherine S. Bromberg, DOR communications director, said yesterday.

In response, Reeves insisted yesterday that he had paid all his income taxes. The mayor, in fact, said he received a state tax refund in 1992.

But despite requests by The Crimson and other media outlets, the mayor refused to produce a copy of his 1992 state tax returns.

"Under the [Freedom of Information Act], one is not required to release one's tax returns, nor are elected officials," he said yesterday. "I don't envision that I'll be releasing any tax returns."

The mayor declined to speculate why DOR had no record of his 1992 returns. "I'm not responsible to answer why DOR doesn't have the information," he said. "I don't run DOR."

In addition, Reeves faxed a five-page letter last night to the Cambridge Chronicle. The letter, which was obtained by The Crimson, countered a Chronicle report that Reeves had failed to account for more than 275 expenses he made on his city-provided MasterCard over the pass year.

"I would like to reiterate that at no time has City money been spent for personal expenditures," Reeves said in the statement.

Meanwhile, Reeves admitted yesterday that a visit from two Federal Bureau of Investigation agents to his City Hall office Monday concerned the more than $30,000 in extra pay he received from the school committee over the past three years.

'Extremely Remote'

Speaking on condition of anonymity, a state official said it was unlikely that Reeves had filed the 1992 tax return. The official said the possibility of a data-entry error was "extremely remote."

"It's very slim," the official said. "In order for [the return] to not show at all, there would need to be scads of misfed information. It's highly, highly unlikely."

Bromberg said DOR had records of Reeves' 1990, 1991 and 1993 returns. Returns for 1994 are not yet due.

"As a general rule, when it comes to DOR's attention that an income tax form does not seem to have been paid, we routinely look into it," Bromberg said.

She said DOR first discovered the absence of Reeves' returns last week, when the Boston Globe requested them. The Globe first reported the missing returns yesterday.

Bromberg refused to discuss Reeves' specific case. But she said DOR policy called for sending repeated notices to delinquent taxpayers if it is found that they did not submit their returns.

"If they don't owe any taxes, that's it," Bromberg said. "If they owe taxes, they must pay them and penalty interest." She said the penalty is based on a graded scale tied to the annual percentage rate.

Bromberg said that, in some cases, legal action may be taken against a delinquent taxpayer. She said DOR refers criminal investigations to the state attorney general's office.

The maximum penalty for failure to pay state income taxes is one year in prison and or a $1000 fine, according to John R. Lamontagne, spokesperson for the state attorney general's office.

Reeves has failed to pay his taxes twice in the past. The Internal Revenue Service (IRS) said yesterday that he failed to completely pay his federal income taxes in 1987 and 1988.

Peggy Riley, public affairs specialist for the IRS, said the revenue service took the unusual step of placing a lien against the mayor's assets in 1991. The function of a lien, she said, is "to assist in the collection."

Before a lien is put on a person's property, he or she receives five notices of delinquency from the IRS and a visit from a revenue officer, Riley said.

"There's also a notice that's sent, certified mail, that the lien is going to be placed," Riley said, "so that a tax-payer would be fully aware that this is happening."

The IRS found that Reeves' tax payment was short $2394.61 in 1987 and $5000.16 in 1988. The lien was put on Reeves' assets on March 27, 1991.

The lien was removed when Reeves paid the $7394.77 balance on September 30, 1991, Riley said.

Reeves' five-page statement, which was faxed to the Chronicle last night, strongly criticizes an October 13 story by reporter Scott Farmelant.

According to the story, Reeves had refused to explain the city-related purposes for more than 275 expenses he charged on his city-provided Master-Card since July 1993.

In his statement to the Chronicle, Reeves itemized 28 charges he made in November 1993 that were detailed in a graphic that the paper entitled "Out on the town with Mayor Ken Reeves."

The "calendar and the accompanying article represent a new low in the paper's history," Reeves wrote. "The reporting was rife with inaccuracies and international misstatements of fact--inaccuracies of which the editor and writer were perfectly aware."

According to City Auditor James A. Lindstrom, the Chronicle requested and received a full list of mayoral expenses from the auditor's office, covering from July 1, 1993 to July 31, 1994. The request was made under the Freedom of Information Act (FOIA).

But a second FOIA request that asked for the business purposes of the 275 expenses was refused by Reeves.

In the letter, Reeves said he "could see no reason why valuable staff time should be spent responding to the paper's lengthy 32-page questionnaire."

"The information the paper asked for did not exist without extensive research into nearly three years of previous activity," Reeves wrote.

He added that he provided the Chronicle with copies of two letters he had circulated to the press denying any wrongdoing.

"All of my expenditures are valid and in line with the traditional functions of the Mayor's Office," Reeves wrote. "I am not doing anything substantially different from previous Mayors."

The statement provides an explanation for 27 of the expenses. An $82.25 charge made at Mario's Italian Restaurant in Boston on November 24 was unaccounted for.

The charges include numerous catering and refreshment expenses, several dinners and a few gifts given by the city to employees.

The largest expense Reeves incurred in November, according to the statement, was a $299.80 charge for an October 14 reception at Rebecca's Cafe in Boston, for Cambridge elementary-school principals. The smallest was for $32.30 at the Ritz Carlton Boston hotel, made November 7, for a meeting of Men of Color Against AIDS (MOCCA).

Repeating his comment from a city council meeting Monday, Reeves charged the Chronicle with racial bias.

"You disillusion the many citizens of color in this community who are only too used to seeing their public official smeared in the press," he told the Chronicle.

"This is a great City," the mayor concluded. "We deserve a better newspaper."

Despite Reeves' statement, the Cambridge Civic Association (CCA)--the city's leading political group--repeated yesterday its demand for a full investigation of the expenses.

"I think it's time for the city to audit his credit card use," said R. Philip Dowds, CCA president.

Lindstrom said yesterday that the auditor's office had discussed the expenses with the mayor.

"He has assured us that they are legitimate charges," the auditor said.

Lindstrom conceded the expense process "isn't that rigorous." He said the city is sent a monthly credit card bill from the Cambridge Trust Company, which issues the card. The Master-Card has a $9000 limit, Lindstrom said, adding "the mayor has never charged in one month anything like that."

Reeves "will delete from that [bill] items that he had charged for personal expenses," Lindstrom said. "That isn't often, I should say."

The city must rely on Reeves' word, the auditor said.

"At the moment, the only documentation that we have is the credit-card charge itself and the mayor's assurance that it is a city-related expenses," Lindstrom said.

The auditor said he hopes the credit-card issue will be addressed at a city council hearing regarding travel-related reimbursements made by city employees. That meeting is scheduled for November 7.

FBI Inquiry

Reeves acknowledged that he was visited by two FBI agents Monday afternoon. In an interview with The Crimson in his office Monday night, he said that he called his attorney and will schedule an appointment with the two agents.

Reeves declined to say Monday night which subject the agents wished to discuss.

But in an interview with The Crimson yesterday morning, he said the agents had asked about the more than $30,000 in extra salary that he got from the Cambridge school committee over the past three years.

That overpayment was subject to heated discussion within the nine-member city council earlier this fall. Reeves and other city officials said the extra money came because the school committee mistakenly paid the mayor, the committee's chair, the annual $13,000 stipend paid to its members.

The mayor's salary, now more than $44,000 a year, was adjusted in 1988 to include the stipend. Reeves said he was unaware of the overpayment, but several officials and civic leaders criticized him for not paying closer attention to his personal finances.

Special Agent William J. McMullin of the Boston FBI bureau refused to discuss the case yesterday.

"Our policy is not to confirm or deny the existence of an investigation unless [the subjects] have been charged," McMullin said.

McMullin said a visit by FBI agents does not "necessarily involve a criminal case."

In what appears to be part of a mayoral strategy, Reeves' supporters continued to attack his critics, especially the media, yesterday.

"Sometimes editors will sacrifice quality for the sake of business," said Van Le '89, a second-year law student at Northeastern University and former aide to the mayor.

Councillor William H. Walsh, a political ally of the mayor, said news about Reeves' recent tax history is being blown out of proportion.

"A lot of people don't file them in time or file two or three at a time," said Walsh, who was convicted in May of 41 counts of fraud and conspiracy and is scheduled to be sentenced November 8. "If the federal government wants to enforce the law, they can probably put 25 percent of the state of Massachusetts in jail."

But Dowds, a political opponent of Reeves, said he wants to see more details before coming to a final conclusion. "It looks like Ken has a problem with money," Dowds said.

Le, however, contended that Reeves' support is strong.

"If anything, [the controversy] will help his re-election chances because people are enraged by what is perceived as a media lynching of a good man," the former aide said

"As a general rule, when it comes to DOR's attention that an income tax form does not seem to have been paid, we routinely look into it," Bromberg said.

She said DOR first discovered the absence of Reeves' returns last week, when the Boston Globe requested them. The Globe first reported the missing returns yesterday.

Bromberg refused to discuss Reeves' specific case. But she said DOR policy called for sending repeated notices to delinquent taxpayers if it is found that they did not submit their returns.

"If they don't owe any taxes, that's it," Bromberg said. "If they owe taxes, they must pay them and penalty interest." She said the penalty is based on a graded scale tied to the annual percentage rate.

Bromberg said that, in some cases, legal action may be taken against a delinquent taxpayer. She said DOR refers criminal investigations to the state attorney general's office.

The maximum penalty for failure to pay state income taxes is one year in prison and or a $1000 fine, according to John R. Lamontagne, spokesperson for the state attorney general's office.

Reeves has failed to pay his taxes twice in the past. The Internal Revenue Service (IRS) said yesterday that he failed to completely pay his federal income taxes in 1987 and 1988.

Peggy Riley, public affairs specialist for the IRS, said the revenue service took the unusual step of placing a lien against the mayor's assets in 1991. The function of a lien, she said, is "to assist in the collection."

Before a lien is put on a person's property, he or she receives five notices of delinquency from the IRS and a visit from a revenue officer, Riley said.

"There's also a notice that's sent, certified mail, that the lien is going to be placed," Riley said, "so that a tax-payer would be fully aware that this is happening."

The IRS found that Reeves' tax payment was short $2394.61 in 1987 and $5000.16 in 1988. The lien was put on Reeves' assets on March 27, 1991.

The lien was removed when Reeves paid the $7394.77 balance on September 30, 1991, Riley said.

Reeves' five-page statement, which was faxed to the Chronicle last night, strongly criticizes an October 13 story by reporter Scott Farmelant.

According to the story, Reeves had refused to explain the city-related purposes for more than 275 expenses he charged on his city-provided Master-Card since July 1993.

In his statement to the Chronicle, Reeves itemized 28 charges he made in November 1993 that were detailed in a graphic that the paper entitled "Out on the town with Mayor Ken Reeves."

The "calendar and the accompanying article represent a new low in the paper's history," Reeves wrote. "The reporting was rife with inaccuracies and international misstatements of fact--inaccuracies of which the editor and writer were perfectly aware."

According to City Auditor James A. Lindstrom, the Chronicle requested and received a full list of mayoral expenses from the auditor's office, covering from July 1, 1993 to July 31, 1994. The request was made under the Freedom of Information Act (FOIA).

But a second FOIA request that asked for the business purposes of the 275 expenses was refused by Reeves.

In the letter, Reeves said he "could see no reason why valuable staff time should be spent responding to the paper's lengthy 32-page questionnaire."

"The information the paper asked for did not exist without extensive research into nearly three years of previous activity," Reeves wrote.

He added that he provided the Chronicle with copies of two letters he had circulated to the press denying any wrongdoing.

"All of my expenditures are valid and in line with the traditional functions of the Mayor's Office," Reeves wrote. "I am not doing anything substantially different from previous Mayors."

The statement provides an explanation for 27 of the expenses. An $82.25 charge made at Mario's Italian Restaurant in Boston on November 24 was unaccounted for.

The charges include numerous catering and refreshment expenses, several dinners and a few gifts given by the city to employees.

The largest expense Reeves incurred in November, according to the statement, was a $299.80 charge for an October 14 reception at Rebecca's Cafe in Boston, for Cambridge elementary-school principals. The smallest was for $32.30 at the Ritz Carlton Boston hotel, made November 7, for a meeting of Men of Color Against AIDS (MOCCA).

Repeating his comment from a city council meeting Monday, Reeves charged the Chronicle with racial bias.

"You disillusion the many citizens of color in this community who are only too used to seeing their public official smeared in the press," he told the Chronicle.

"This is a great City," the mayor concluded. "We deserve a better newspaper."

Despite Reeves' statement, the Cambridge Civic Association (CCA)--the city's leading political group--repeated yesterday its demand for a full investigation of the expenses.

"I think it's time for the city to audit his credit card use," said R. Philip Dowds, CCA president.

Lindstrom said yesterday that the auditor's office had discussed the expenses with the mayor.

"He has assured us that they are legitimate charges," the auditor said.

Lindstrom conceded the expense process "isn't that rigorous." He said the city is sent a monthly credit card bill from the Cambridge Trust Company, which issues the card. The Master-Card has a $9000 limit, Lindstrom said, adding "the mayor has never charged in one month anything like that."

Reeves "will delete from that [bill] items that he had charged for personal expenses," Lindstrom said. "That isn't often, I should say."

The city must rely on Reeves' word, the auditor said.

"At the moment, the only documentation that we have is the credit-card charge itself and the mayor's assurance that it is a city-related expenses," Lindstrom said.

The auditor said he hopes the credit-card issue will be addressed at a city council hearing regarding travel-related reimbursements made by city employees. That meeting is scheduled for November 7.

FBI Inquiry

Reeves acknowledged that he was visited by two FBI agents Monday afternoon. In an interview with The Crimson in his office Monday night, he said that he called his attorney and will schedule an appointment with the two agents.

Reeves declined to say Monday night which subject the agents wished to discuss.

But in an interview with The Crimson yesterday morning, he said the agents had asked about the more than $30,000 in extra salary that he got from the Cambridge school committee over the past three years.

That overpayment was subject to heated discussion within the nine-member city council earlier this fall. Reeves and other city officials said the extra money came because the school committee mistakenly paid the mayor, the committee's chair, the annual $13,000 stipend paid to its members.

The mayor's salary, now more than $44,000 a year, was adjusted in 1988 to include the stipend. Reeves said he was unaware of the overpayment, but several officials and civic leaders criticized him for not paying closer attention to his personal finances.

Special Agent William J. McMullin of the Boston FBI bureau refused to discuss the case yesterday.

"Our policy is not to confirm or deny the existence of an investigation unless [the subjects] have been charged," McMullin said.

McMullin said a visit by FBI agents does not "necessarily involve a criminal case."

In what appears to be part of a mayoral strategy, Reeves' supporters continued to attack his critics, especially the media, yesterday.

"Sometimes editors will sacrifice quality for the sake of business," said Van Le '89, a second-year law student at Northeastern University and former aide to the mayor.

Councillor William H. Walsh, a political ally of the mayor, said news about Reeves' recent tax history is being blown out of proportion.

"A lot of people don't file them in time or file two or three at a time," said Walsh, who was convicted in May of 41 counts of fraud and conspiracy and is scheduled to be sentenced November 8. "If the federal government wants to enforce the law, they can probably put 25 percent of the state of Massachusetts in jail."

But Dowds, a political opponent of Reeves, said he wants to see more details before coming to a final conclusion. "It looks like Ken has a problem with money," Dowds said.

Le, however, contended that Reeves' support is strong.

"If anything, [the controversy] will help his re-election chances because people are enraged by what is perceived as a media lynching of a good man," the former aide said