The Beach Bar owner Allan MacPhee said he awoke early Thursday, November 17, to a swarm of federal Alcohol, Tobacco, Firearms and Explosives (ATF) and Internal Revenue Service (IRS) agents barging into his apartment above his popular Wharfside Village bar with guns drawn.
More than a dozen agents descended on MacPhees business and home around 7:45 a.m. An ominous black helicopter made several passes over the Cruz Bay waterfront area during the next five hours and IRS agents at the scene would only acknowledge they were serving a search warrant.
The investigation involves agents from the IRS Criminal Investigation Division and the matter is under seal, said IRS spokesperson Elida Michaud. We cant discuss it further.
Truck Purchase Questioned
The investigation apparently stems from the purchase of a truck, according to MacPhee, who shared his confusion about the dramatic raid.
I purchased a truck a couple years ago in St. Thomas with two different checks a check from my account, a check from my wifes account and some cash, and the disbursement of the three broke some kind of banking regulation, some sort of fraud, the popular bar owner said.
That gave them the right to seize my truck and investigate my business and my home, he added. The action also reportedly included a simultaneous raid on MacPhees Florida home.
Two cop cars blocked either side of the street (that runs by The Beach Bar), and there were six or seven (V.I. Police Department) cars right next to the bar along with a forensics car, said one witness to the Wharfside action. It wasnt haphazard. It was like theyd been planning it for six months.
They rushed in with guns drawn and bolt cutters, the witness added.
Rumors were rampant around the island that MacPhee and his boat were missing, but the bar owner was in his apartment before, during and after the investigation, he said.
My boat is in the boatyard and will be back today its being fixed, MacPhee told St. John Tradewinds Thursday afternoon. It will be back on the mooring tomorrow.
No Arrest, Business Reopens
The bar owner also clarified rumors he had been led away in handcuffs.
There was no handcuffs, no arrest and they let me open the restaurant, MacPhee said.
Agents were gone from the premises and The Beach Bar was open for business by 1 p.m. on Thursday.
MacPhee, who said he was sleeping when agents entered his house, said he was very confused and thought they were investigating recent crimes on the island.
I thought it mustve been a misunderstanding I thought it had to do with one of these things going on on the island, he said. I thought Oh my God, what have I done?
Several other Cruz Bay business owners and residents questioned the high-profile law enforcement presence on the island for an IRS violation in light of recent serious crimes on the island including a murder.
Federal officials said there were several unrelated law enforcement activities by separate agencies that morning.
Based on his understanding of the law, MacPhee said he is accused of violating section 25.01 of the Criminal Tax Manual when he made a purchase over $10,000 but paid for it with three different forms of payment, each under $10,000.
A business must file a form 8300 when receiving payment for an item greater than $10,000, according to the Department of Justice (DOJ) Tax Divisions Web site.
The Anti-Drug Abuse Act of 1988 makes explicit prohibitions against causing or attempting to cause a trade or business to fail to file a Form 8300, states the DOJs Web site.
I assume the intent of the law is to stop money laundering, said MacPhee. I wish I had enough money to launder.
IRS agents took the bar owners bank and tax records, his computer and seized his truck.
Some of the boxes seized were seen being loaded onto the helicopter at the V.I. National park ball field.
It will take a couple of months to see if I broke some banking law, said MacPhee.
Criminal charges may be brought against persons who willfully violate either the duty to file correct Forms 8300 or the statutes prohibitions against structuring transactions to avoid or frustrate reporting requirements, the DOJs Web site said.
Based on this description and MacPhees understanding of the law he broke, he structured a transaction to avoid reporting requirements by paying for an item costing more than $10,000 with several payments less than $10,000 each.
The willful failure to file a Form 8300 was upgraded from a misdemeanor to a felony offense by the Crime Control Act of 1990, and is punishable by one to five years in prison and a maximum fine of $250,000, according to the Web site.
It should be noted that the specific law broken by MacPhee has not been confirmed by IRS officials, who will not comment on anything regarding this case, IRS laws or investigation policies and procedures.
MacPhee was extremely confused at the nature of Thursday mornings investigation, he said.
They barged into my house with shotguns and Im like woah man if youre looking for guns and drugs thats not my deal, MacPhee said. Its like every crazy movie or story youve ever seen about the IRS they dont really have to respect any laws and they do what they want to do.
The agents did not destroy his house or rough him up, said MacPhee, who added that agents were professional.
I was quite positive it was some kind of wrong address thing, that they were looking for somebody else, said the bar owner. There was nothing illegal here.
The IRS agents left MacPhee with some paperwork and instructed him to get a lawyer, he said.
I guess they can do it to anybody, said MacPhee. Im pretty much floored right now.