Memorandum

To . SAN FRANCISCO (196A-SF-93255) (P) Date

Date 3/8/91
3/8/91

From sAJ. . .___-----1

sAJ _ (SQ' 5) b7C

Subject CHIP ARMSTRONG, Jr., dba

Hamilton Taft and Company
1 Market Plaza
Spear Street
street Tower
San Francisco, California
FBW; MFi Tax Fraud;
00: SAN FRANCISCO

The purpose of this_memo

this memo is to'document
tO'document events
events that
that
";'::'::~;;"""';~~I"-I:.G.iiIIol~e since ~brua:;y
~~;;;:"":~~Io6..JII'oIIIel...,e
~~~~________~was
9
6bruary 13 II ~
19 whi,?h is the date
which
~was last interviewed by the writer.
date that
On
that
~~~~ On that
that
__________
___________ provided a numbe
~provided numbs ocuments to iter which
iter which
have been disse ~na e y he writer to qA ~A the IRS
or the
or IRS
C~ere in San Francisco, telephone number 556-6850.
C~here 556-6850. ItIt should:
should:
also be noted. noted. that a copy of these documents along with aa summqry summ~ry
of the writer's review of San Francisco file 196A-2868 has has been
been
prepared and disseminated to AUSA MICHAEL YAMAGUCHI at 556-1328. 556-1328.
A copy of this this summary
summary is a matter of record under aa separate
separate
communication which is a part of this file.
Due toto the
the fact that AUSA
AUSA YAMAGUCHI was on annual
annual leave
leave
and did not return to his office until March 4, and/or 5, 1991 1991 no
no
overt investigation was undertaken. This matter was referred to to
YAMAGUCHI
GUCHI because of his previous
revious referral which he handled ~
~
)7C Mr. Y
~g..arding HamHton
re ardin Haml on Taft -in
w'
in which he subsequently
subse entl QIilCl
handled
for
f r- j.n:p
~
~_

I
0]
_
pros e cntiOIL This
l.sck OJ prosecution..
lJlck
_it
This matter was
was handled under--SF
it was
was investigated by S .
and was closed ~h
196A-2868 and
under--SF 196A-2868
--- -7
-7
August, 1988.
with regard to
with to information supplied
supplied byl byl writer
writer I
was reluctant to
was to initiate
initiate any
any overt
overt investigation
investigation for
for fear
fear that-
there potential liagility
~uld~ Eotential
there would~ liability qttached
attached wherein the
governin~nt £.QB1dJ2e
governm~nt £QB1d1;!e accused..Q.t
accused.Qf initiatipg thethe pownfall
downfall ,of
captioned company
captioned byjthe mere
COmpany bvl'the mere fact that
that it was
was making
making overt
overt
inquiries. [I ..- ' .has provided detailed informat.ion
,has which,I ~
information which
of this date, has'been
of has· been unable to be
unable to be thoroughly corroborated.
corroborated.
is being
Progress is
Progress being mademade to
to effect such coriOEorat2on.
effect such corroDorat2on. .
I. I. I~ expressed apprehension in
expressed apprehension in his
his mind
mind regarding
regarding
the "extensive
the "extensive"n time-it
time-it was taking for the
was taking the government
government to to decide
decide
whether or
Whether or not
not to
to initiate
initiate an
an investigation
investigation and
and to effect some
to effect some
criminal process. He
criminal He was
was told
tolc:1 tbat
that the
the government
government haJl._:t.Q ......ll9.;.~_
@~_
ha_g._:t.Q.........
victim before
victim before any
any process
process would
would bebe forthcoming.
forthcoming. He
He was
was further
further
 196A-SF-93255
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advised on more than one occasion by the writer of the potential

civil !iability mi~t attach to the revelation to the
liability which miggt
general public that the FBI was conducting or maybe conducting an
investigation into certain alleged criminal activities on tne
the
part of Hamilton Taft. '.

Nonetheless, on February 1-1, 1991~r=

]Ll, 1991~r= Ilsaw
saw fit to
contact the congressional offices here in San Francisco of
congress persons NANCY PELOSI and BARBARA BOXER. ~
Congress
~t'
~presentat' PELOSI's office to whom
on resswoman PELOSI/s
spoke ave arne of an investi ative re orter e
CQDtactjng.. with b~s infdrmat-ion.
~hould consider contacting.. Fel;>ruar~,';
On Fepruar}!'_12.';
infOrmat.iQD. Qn
writ~r as well
~1, the w~it~r wall as ~gentl
~gentl Cln repo~ed
lof the eIn repo~ed
-~ receiving telephone calls from an attorney at the Department of
jnquiry as to the FBI and/or IRS' connection if
Justice making inquiry
any with Hamilton Taft.
b7C
On February 13, 1991, during the interview of~I
ofl~ ________
___
conducted by the writer, he was again questioned as to the reason
for making calls to the aforementioned oonaressional
conaressional offices. He
stated that he was concerned about I

Ifollowing his resignation from Hamilton

~T-a-Y-~t--o-n--F-le-~b--'r-u-a-r-Y~1~1~,~1~9~9~1~.
"'rrl-a,'""'I'.rll"!"'~t--o-n--"F~le""'tb""'r""'u"'a""r-Y~1~1~,~1!"'!9!!"'!!9!!"'!!1~. I
Itt should be noted that
I Il
during this interview on February 13, 1991 re-iterated that fact fact.-
that!
thatl !I
1
1
again reminded of potential civil liability problems tnat
I J--'
I He was J----
that might ~
£n?ue from the publicatiQD
gn?ue publicatigo Qf the possibl~nterest possibl~nterest of the FBI
with res~9t resE§.g~~-Hamilton to-Jiamilton £af~. £af~.

On Wednesday, March 6 1991, the writer received a~

telephone call from SAJ
~N:,
; JIRS CID who advised that he
had been called by a M-. RALPH :IN W, an investigative reporter
for the Wall street Journal here in San Francisco. The purpose
of KING's call to SWAIN was to confirm that the IRS was
conducting~DY§stigation regarding Hamilton Taft.
conducting~nY§stigation On the
morning of March 6, 1991, the writer reviewed message slips that
had arrived on Tuesday, March 5, 1991, the writer having been on
sick leave that day and one of, them was from RALPH KING of the
Wall street Journal. The writer did not return KING's phone
res~g to a page, for a telephone calIon
call, however, in res~g
~h-~) 1991, the writer became connected
the afternoon call of ~h-_6J)
street Journal. The usual inquiries were
to Mr. KING of the Wall street,Journal.
t~at, is we can neither confirm
made and the usual response, t~at,
and/or deny the existence of any investigation was provided to
perturped £y
Mr. KING who seemed perturbed thi§
~ ~espOQse.
~espon~.

2
196A-SF-93255
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On March 6, 1991,1 rr head

head of
of corporate
corporate
security of Sun Micro Systems Inc. atat 2550
2550 Garcia
Garcia Ave.,
Ave., Mountain
Mountain
View, California 94043 telephone number
94043,1 telephone number (415) 336-0496 was
(415) 336-0496 was
called by the writer in response to call that he
call that he had
had made to our
made to our
office on March 5, 1991.
that his office
office had
had
been contacted by was
was
accompanied by an attorney
attorneJ one (ph)
(ph) who
who advised
advised that
that
oflI
the purpose of .. _
_contac J.cro
lcro Systems was to
Systems was to
advise Sun Micro Systems that it had been
been tBe
the victim
victim of
of aa fraud
fraud
perpetrated by Hamilton Taft' on Sun .-.Micro
Micro systems
Systems andand numerous
numerous
Taft. I
other corporate clients of Hamilton Taft. I ~dvised
'advised
the writer that he would fax certain documents
documents up up to
to San
San
5uggestiqn. These
Francisco at the writer's suggesti~n. These documents'included
documents· included aa .
copy of
of· the service agreement that( exists betw~en
thal: exists Sun. .l~icl;"o
betw~en Sun .Mic1;"o .. .
systems and Hamil ton Taft dated (October 1,
Systems 1981 as
1, ..__.1987 as well
well as
as copies
copies
of certain Federal tax forms whicn had been executed
had been executed by
by employees
employees
of Hamilton Taft Company. I~ Ilalso
also advised
advised the
the writer
writer
that II rpad
ad of his own volition convened
several of the corporate representatives
convened aa meeting
representatives who
who he he had
of ""~~,1
meeting of
had contacted
""~~}:'~~
..0,
contacted .t~/;r:~·,:'-
_.':~
.t~~('-_~,':;~'.'.J _'J_'- .. ' /
" ;~
.Jr

presumably in the first

presumably first week of March telling
telling these these corporations
corporations
who are
who are current and/or former clients of Hamilton
Hamilton Taft, Taft, that
that they
they
had in
had in fact been ,defrauded
defrauded by
by Hamilton Taft. Sun
Sun Micro-Systems
Micro-Systems
reluctantly
reluctantly agreed to this meeting which
to "host" this which was was to
to take
take place
place .ft"' .I"'"
during the afternoon
during afternoon of
of March 1991 at
March 8, 1991 Sun Micro
at Sun Micro System's
System's "';
offices in Mountain View. ,1'
,i' "" '

.' ,.. /, '~

nf ,,[)if/,
:':' ;

Of the
Of the mornin:
mornin: ofof March
March 7, H91, II
7, 1991, Ithrobgh
I,throtgh' .....
his associatel
Security-.
l,
I, an investigator
investigator for
Department of un Micro Systems, facsirniled
the COJ;.porate
for the Co~porate
Securit~Department facsimiled 16/pages
l~~ages 0,£ oj
documents
documents to the writer. The
The most salient point of these
point of t~ese
documents was
documents letter to
was aa letter to Sun Micro systems
Sun Micro Systems dated
dated February
February 13,13, "', ,'.' '
1991 from the ,.IRS in-- Fresno..
1991 Fresno. The The let}:er
letter refers
refers toto aa particular
particular ,/' ;) >')'
tax identification
identification number utilized by Sun Micro Systems
number utilized by' Sun Micro Systems and . and . '~:
references aa tax
references tax period
period ending
ending september
september 30, 1990.'- The
30 I 1990.; The letter
letter ~,l~:?,.,.
}}
goes on
goes to thank
on to thank taxtax payer
payer (Sun
(Sun Micro Systems)
Systems) forfor its
its reply
reply t·t -.~, '; if
'

dated January 25, 1991 and its payment of $260,784.25 in

dated January 25, 1991 and its payment of $260,784.25 in penaltyJ;'..... penaltyJ,
fees and
fees and for
for its
its late
late deposit
deposit ofof ($5,215,
($5,215, 684.86).
684~86). The
The " - .,~
Signifirn:e of th~S ~mmunication is that Sun Micro
signifiri:lD:e Of th~S ::mmunication is that Sun Micro Systems Systems ...
.,'' ..
t h r o u g h _ _ h a s represented, as of March
t h r o u g h L J h a s represented, as of March 7, 1991, that 7, 1991, that
did 1nact
it did
it lnac~ sen sen tt ee appropriate
appropriate money
money that
that is
is $5,215,684.86
$5,215,684.86
Hamilton via a wire in
to Hamilton Taft via a wire transfer in order to pay
to Taft transfer order to pay employment
employment
tax obligations
tax obligations do do and
and owing
owing the
the IRS
IRS for
for the
the tax
tax period
period ended
ended
September 30
September 30 rr 1990.
1990. PerPer an agreement of
an agreement of which writer is
the writer
which the is inin
receipt, that is, the
receipt, that is, the service agreement between Hamilton Taft and
service agreement between Hamilton Taft and
Sun Micro
Sun System~, Hamilton
Micro System?, Hamilton TaftTaft is
is responsible
responsible for for the
the
payment of~--L~e
payment ot~--L~e penalti~§4
penalti~§4 It
It is
is an
an inference
inference drawn
drawn by by Sun
Sun
33
 196A-SF-93255
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Micro Systems personnel that this document tends to corroborate

what I I was alleging in his representations to the
government. '
On the afternoon of March 7, 1991, AUSA YAMAGUCHI was
personally visited by the writer and a brief update was provided
to him of events that have taken place. On March 8, 1991, copies
of the aforementioned facsimiles were provided to AUSA YAMAGUCHI
fore his review. On March 8, 1991, Mr. YAMAGUCHI suggested to
,that efforts continue to accumulate enough probable
the writer -that
cause to cause the issuance of a search warrant for the offices
b7C at Hamilton Taft at the earliest possible date.

The following corporations have been contacted by

by ]
I land/or his attorney and ~d~~~ed
~d~~~ed that they' have been the
victims of fraud perpetrated on them by Hamilton Taft. These
corporations are costal
Costal Savings Bank, Sun Micro Systems, American
West Airlines, and one or two chemical companies located at the
east coast. In addition, I I I
I advised writer that he
has been contacted by representat~ves
representat~ves of Lloyds of London
Insurance company with respect to Hamilton Taft. It is "'y,nkno..wIl
is-y,nkno~~
~~~~~~~dyal~!!!p~;~_!,~~_,~. wil.~ , h_e,Y,~~,},~E?i~~
~~~~~~tdyal~!!!p~;~_!,~~_,~.wil.~ ~,~!~,!:~ ~~,~_ ___ "_9! ..J)},e
h_e,Y,~~,},~E?i.~~,~~~!~,!:~~~,~, J)}.e
meetl.ng_",Lo-.-oe" ··he~d_~"a_t,.Sun",,M~c_ro __ Systems
me~t~ng_"",I:.o-;-oe,,··he~d_~,at,.Sun.,M~c_ro systems, ().ff~~es
().f:!:~pes afternoon
,on the .afternoon
o~March
at-March 8, 1991.

San Francisco at San Francisco, California:

Investigation is continuing.

4*