CASEY OVERVALUED PATENTS, U.S. TAX COURT JUDGE RULES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP07-00568R000301340001-6
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 3
• Document Creation Date: December 22, 2016
• Document Release Date: October 19, 2012
• Sequence Number: 1
• Publication Date: July 19, 1985
• Content Type: OPEN SOURCE

Declassified and Approved For Release 2012/10/19: CIA-RDP07-00568R000301340001-6
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Declassified and Approved For Release 2012/10/19: CIA-RDP07-00568R000301340001-6
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CIA-RDP07-00568R000301340001-6 1 9 JUL 1985
I Declassified and Approved For Release 2012/10/19:
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Declassified and Approved For Release 2012/10/19: CIA-RDP07-00568R000301340001-6
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THE WASHINGTON POST
Casey Overvalued Patents,
U.S. Tax Court Judge Rules
By Charles R. Babcock
Wailiogtoo Poet Staff Writer
A U.S. Tax Court judge has ruled
that two engine patents that CIA
Director William J. Casey valued at
$5 million in 1976 had no commer-
cial value at the time. "The ground
less gross overvaluation of the
patents is convincing evidence that
tax consequences were the para-
mount concern of all the partici-
pants," Judge Lapsley Hamblen
added in Monday's 'rural&
Hamblen disallowed all $5.5 Mil-
lion in deduction's the Tri-Rotor
Motor Co. *Was took for depre-
ciation, interest and research and
development' costs. Casey is not
liable *X bet* tuns in the case be-
cause. he. wappot a member of the
PaelnershitL ' -
Evident.* iii the case showed that
Carl G. Paffendorf? 'a longtime
friend and imainees. associate of
caliey,,stried to ,Pell Partnership in-
terests in the engine deal by prom.,
ising and\ 3-to-1 tax write-
offs. ?The Internalt Revenue Service
has been' aggreadively t challenging
such tine\ shelt4s, and recent
diaiiged' in the tax law, have in-
creased penalties Cor abusive abet- ?.
teirs. ?
Casey Paid .$10,400 for a 30 per-
cent interest jn the
in ,1976; a few mon
uing them:at. $5 forsaleto
Piffe6dotri
$50;000 of the purchase price was
paid in 'Cith; , the remaining $4:95
million Was in the foriri., of a 4b6n-,
recourse" note; which ?the jadge
ruled as "Mt genuine \ indebted.-
ness. The amount of thrl 'note far
exceeded the Salim of the iiktents."
Hainbien noted that "the princi-
pals provided 'confused and ?eqiiiv-
ocal stories as to how the purchase
price of $5 million was determined."
Paffendorf testified that Casey "set
the price .,at $5 million," the
judge said. "Aceording to Casey, he
negotiated the sale on behalf of the
patent holders add he did not know
how they arrived at the $5 million
figure: In 1976, the patents, had no
cOmniercial value.* '
Hamblen also said that when
Casey was named director of the
Central Intelligence Agency in
1981, lie did not lit on his original
finanOildisclosure form either his
30 percent interest in the. engine
patent of his $1.5 million share of
the note. tie,h2 a subsequent financial
disclosure filing, Casey reported an
'interest in a patent' valued at
$10,400. Casey considered the
patent sale to be 'contingent'. and
the value of the. notes 'specula-
"
Casey is a partner in two other
ventures sponsored by Paffendorf
that also are being contested in
U.S. Tax Court. Records in those
cases show that Casey could be li-
able for more than $100,000 in
back taxes, penalties and interest.
In one case, Casey took about
$60,000 in deductions over four
....years on an investment of $95.
Jerome Kanierman; att?y for
the partners in the Tri-Rotor cape,
could not be reached for comment
yesterday. Casey said: am not a
party to the case. My rale was a
simple one, to negotiate for the
patent I had an interest in, to get
the beat commitment from the li-
censee that I thought we could get."
Rain Dam
Columbia Hits
United Press Internatk
, CAPE CANAVERAL,
18?More than 1,000 fra
shield tiles on the fiagsh
Columbia were damaged
storm during a ferry ft
California to the Keane
Center, NASA said today.
The National Aerona
Space Administration sal
damage was "considerabk
between 200 and 300 of
prObably will have to he
-Engineers' did not know
Pairs would Aeln7, CPI=
flight, scheduled for Dec.
tOlisoIb* the, 00021
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1SCOI1
'ENURING
SUNSHINE KRISPY
CKERS
Declassified and Approved For Release 2012/10/19: CIA-RDP07-00568R000301340001-6