Landowner must pay $3.7M tax debt

FILING TAXES: Residents stand in line to file their regular income tax forms in a prior tax year at the Department of Revenue and Taxation. Post file photo

District Court Chief Judge Frances Tydingco-Gatewood ordered a Guam landowner – who once was the director of a company that proposed to develop a 15-story hotel fronting Agat Bay – to pay $3.7 million in delinquent taxes and penalties.

Tydingco-Gatewood issued the order on Monday against Danny Leon Guerrero after the defendant went on trial from July 16 to 18 in federal court. The case was prosecuted by the Office of the Attorney General of Guam.

The unpaid taxes at issue in the case were for 1999 to 2002.

Leon Guerrero had purchased six parcels of land in Mongmong-Toto-Maite between November 2000 and May 2002. He subsequently transferred some interest in those properties to his ex-wife and to his sister in separate transactions.

Despite those transfers, Leon Guerrero owed taxes on these properties, the court decided. The court didn't find fraud in the transactions.

During his trial, Leon Guerrero testified that he was not “philosophically opposed” to paying taxes.

"However, he stated at trial and in his deposition that he sincerely believed – and continues to believe – that the government of Guam owed him money, so that is why he was not paying his taxes," court documents state.

At an early stage of its investigation, the Department of Revenue and Taxation had been unable to find paper records of Leon Guerrero's tax assessments because many of the documents within the cardboard boxes in a room called “Central Files” were destroyed by a combination of rainwater seeping through the walls, mold, and termites, court documents state.

Boxes of tax documents destroyed in 2008

A Rev and Tax employee stated at trial she believes in 2008, Rev and Tax destroyed boxes within Central Files that were irreparably damaged, along with their contents.  

Despite being unable to locate physical copies of Leon Guerrero’s certificates of assessment, a new Rev and Tax enforcement team presented convincing evidence that Rev and Tax completed an assessment of Leon Guerrero’s 1999-2002 taxes in January of 2006, which means the tax assessment was not too late. The department creates an electronic register and DRT’s electronic database cannot be manipulated to alter the date that a tax assessment was input into the DRT’s database, court documents state.

The judgment also authorizes the government of Guam to foreclose on six properties owned by the defendant, with 50% of the proceeds of the properties, when sold, paying the taxes owed.

“This is not just a paper judgment,” stated Deputy Attorney General Kenneth Orcutt in a press release. “There are actual assets that the government will use to satisfy the debt owed by the taxpayer to the people of Guam.”

Gov. Lou Leon Guerrero congratulated Rev and Tax officials and personnel in a written statement. “Our Tax Enforcement Team, under the leadership of DRT Director Dafne Shimizu, put in countless hours to ensure that the government was prepared for this case. I’m grateful for their hard work and their continued diligence in pursuing the collection of taxes,” the governor said.

Danny Leon Guerrero was director of Pacific Asian Development Ltd. at http://pacificadl.com, which proposed to develop a project called Guam-Sirena Grand Hotel in 2015. The project hasn't progressed from concept to construction.