Former Pima County Justice of the Peace Keith Bee told the IRS that luxury cars he bought were business expenses for his bus company, according to a federal indictment unsealed Friday.
Bee faces three counts of making a false tax return and one count of corruptly endeavoring to impede the administration of internal revenue laws, according to the indictment dated Sept. 5.
He pleaded not guilty at his arraignment Friday in U.S. District Court in Tucson.
Bee is accused of falsely claiming the purchase of six Ford Mustangs, two Chevrolet Corvettes and a Porsche 911 Carrera, as well as construction work that included a custom garage for those vehicles, were business expenses of Bee Line Transportation LLC, according to the indictment.
Bee also is accused of using the bus lineโs money on custom window treatments, a swimming pool, spa, ramada, landscaping and custom concrete work at residences in Tucson and Washington state.
Bee used the bus lineโs checking account to pay for those purchases from 2011 to 2013 and caused them to be recorded as business expenses for the bus line, according to the indictment.
In 2012, Bee told the IRS the bus line had $4.2 million in business expenses in the previous tax year, but those expenses included personal expenses and depreciation of personal assets, according to the indictment. Bee also failed to report more than $178,000 in capital gains, according to the indictment.
Bee made similar claims in tax returns filed in the next two years. In 2013, Bee stated the bus line had $4.3 million in business expenses and in 2014 he claimed $4.4 million in business expenses. Both amounts included personal expenses and depreciation of personal assets.
In 2014, the IRS began an audit of Bee for tax year 2011. The audit was expanded to include the 2012 and 2013 tax years, according to the indictment.
Bee met with an IRS agent several times during the course of the audit. In response to a summons, Bee provided vendor invoices that did not match documents the IRS obtained from vendors, according to the indictment
โIt appears information in the documents provided by Bee had been removed in an effort to disguise that the invoices actually involved payments for the construction of a new home or the purchase of a high-performance car,โ the indictment read.
Among the contradictory records was a $55,000 invoice for home construction. The construction company gave the IRS documents showing an address in Westport, Washington, with a project title of โNew Home Construction.โ The address and title were missing from the documents Bee provided. Also, an invoice for $99,000 provided by a construction company included an address in Tucson and a project title of โNew Home Construction,โ while the documents provided by Bee omitted that information.
The indictment also listed a $65,000 Ford Motor Credit loan remittance provided by Bee. The documents โappeared to be missing information, making it difficult to determine which Bee Line Transportation asset the invoice was for.โ
Records provided by Ford Motor Credit showed the loan was for a 2013 Ford Mustang GT. Those records included the word โMustang,โ but the records provided by Bee did not.
Beeโs attorney, Michael Piccarreta, said Bee turned over the information cited in the indictment to his tax preparer, who then filed the returns.
Piccarreta said he plans to review the governmentโs evidence and determine โwhy and how those mistakes were made.โ
At most, the evidence could show โreasonable, good-faith disputes over what is deductibleโ but โno ill intent,โ Piccarreta said.
โI certainly donโt think there was any criminal behavior,โ Piccarreta said.
Bee retired as a Pima County justice of the peace in early September. Bee is a Republican and former state senator. He was appointed to the justice of the peace post in 2007 by the Pima County Board of Supervisors to fill a vacancy. He did not run for re-election this year.
U.S. Magistrate Judge Jacqueline M. Rateau set Beeโs trial for Nov. 6. He was not in custody at the hearing, and Rateau ordered that he remain out of custody while he awaits trial.
