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story.lead_photo.caption Rep. Mickey Gates, R-Hot Springs, arrives at the Garland County Courthouse on Monday. The three-term state legislator pleaded no contest to failing to pay income taxes, avoiding a felony trial. - Photo by Richard Rasmussen

HOT SPRINGS -- State Rep. Mickey Gates, a Republican from Hot Springs, pleaded no contest Monday in Garland County Circuit Court to failing to file a state income tax return or pay taxes for the 2012 tax year, entering a plea that defers a guilty finding.

The first-time offenders statute invoked in the plea agreement allows Gates to avoid a finding of guilt if he satisfies the conditions of his six-year probation term. They include paying $74,789 in taxes, penalties and interest owed for the 2012, 2013 and 2014 tax years and filing returns for the 2015, 2016 and 2017 tax years.

The plea agreement pre-empted the jury trial scheduled to begin Monday morning.

Gates said in a text message that he will continue representing north Garland and west Saline counties in the state House of Representatives. Voters elected him to a third term in November despite his arrest four months earlier.

"According to the law, [the plea agreement] is not a conviction and is not to be considered as such," he said. "I will be working with [the Department of Finance and Administration] to resolve this matter. I have no plans on resigning. Since this is an ongoing court proceeding I have no public comment at this time."

The Republican Party of Arkansas said it wasn't prepared Monday to comment. A House spokesman said Speaker Matthew Shepherd, R-El Dorado, was reviewing the plea agreement and gathering further information. He had no comment late Monday.

The day after Gates was arrested in June 2018, Attorney General Leslie Rutledge called on Gates to resign. Gov. Asa Hutchinson and Lt. Gov. Tim Griffin later also urged Gates to step down.

Democratic Party of Arkansas Chairman Michael John Gray on Monday renewed his call for Gates' resignation. Gray initially called for Gates to resign after the lawmaker was charged with six felony counts last summer.

"Mickey Gates didn't pay his taxes for years," Gray said in a news release. "When he got caught, he got a sweetheart deal. Everyone deserves a second chance, but Gates should do the right thing and step down from the Legislature."

A restitution hearing scheduled Dec. 2 will determine what Gates owes for the 2015, 2016 and 2017 tax years. A $6,000 down payment on what is owed for 2012, 2013 and 2014 is due no later than Nov. 25. Gates is required to begin paying $2,000 a month to the state probation and parole agency 30 days after making the down payment.

The affidavit the Arkansas State Police filed in support of Gates' arrest said he owed $259,841 in taxes, penalties and interest as of June 2018. The sworn statement said the finance department found no tax returns for Gates in its computer system, which the statement said contains records dating back to 2003. The state tax code's six-year statute of limitations for prosecuting tax offenses limited Gates' jeopardy to the 2012 to 2017 tax years.

Special Prosecutor Jack McQuary charged Gates last summer with six counts of failing to pay or file a state income tax return, with each count punishable by up to six years in prison and a $10,000 fine. He withdrew five of the charges as part of the plea agreement, which requires Gates to make restitution on all six counts.

McQuary said the state considered the deferred adjudication plea the best means of recouping the money Gates owed, noting that former Saline County Circuit Judge Bobby McCallister entered a similar plea after being charged with failing to file income tax returns.

Paul Gehring, the finance department's assistant revenue commissioner, told the court that the state revenue agency consented to the restitution schedule and probation sentence, which McQuary said can be revoked if Gates fails to comply with the conditions. The five counts that were withdrawn Monday will be refiled if Gates falls out of compliance, McQuary said.

"[The Office of the Prosecutor Coordinator] also feels this is the best way of getting the people of Arkansas back the money that's owed to them," McQuary told the court. "If the defendant does not pay, he's facing prison time. We want to try to get the people their money back. If that doesn't work out, we will file a revocation petition."

Benton County Circuit Judge Brad Karren, whom the state Supreme Court appointed to the case, admonished Gates to comply with the finance department.

"You will comply with all legal requests," he told Gates. "This behavior that's occurred up until now is done. You will comply."

Gates' attorney, Jeff Rosenzweig, had said after pretrial hearings in January and June that Gates had acted in good faith and had done what the finance department instructed him to do. Rosenzweig told the court in June that prior to Gates' arrest the lawmaker was paying $1,500 a month toward a settlement he reached after an audit of him and his promotional products company.

"This was not a case of somebody going off grid and not doing something," Rosenzweig said after Monday's hearing. "The email traffic between [Gates] and [the Department of Finance and Administration] over the period of time in question prints out to over a foot high. This was not a case of somebody disappearing and not doing anything. He was in various disagreements, disputes, arguments and negotiations with DFA during this period of time.

"I won't say they made an example out of him. I will say that it's well known in the tax and revenue community that high-profile prosecutions will tend to encourage other people to comply."

Tax liens filed against Gates in 2016 seek $159,882 owed for the 2014 tax year and $54,325 owed for the 2007 tax year, according to Garland County property records. The state has yet to release either claim.

Securing a permit from his probation officer for travel outside the county is a condition of Gates' probation. Karren said the requirement does not apply to trips Gates makes to the state Capitol in his capacity as a legislator.

Metro on 07/30/2019

Print Headline: Arkansas lawmaker reaches deal in tax case, is ordered to pay at least $74,789

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Archived Comments

  • RBear
    July 30, 2019 at 6:42 a.m.

    "The first-time offenders statute invoked in the plea agreement allows Gates to avoid a finding of guilt if he satisfies the conditions of his six-year probation term." Which means he'll be able to keep his seat and continue to run for the legislature. Pathetic.

  • einnorray
    July 30, 2019 at 7:55 a.m.

    Unbelievable, the state has been shorted $300k for schools roads, healthcare, etc. What about being held to a higher standard of trust and accountability because of his position? The legislator is under oath, to uphold the constitution and laws of the state of Arkansas, Right? Places his hand on the bible and goes out and make laws for the rest of us, which he apparently has no intent of following and his lawyer plays him as the victim. Lastly, what is the state doing with the rest of the deadbeats, is this a standard boilerplate agreement?

  • Dirtdr
    July 30, 2019 at 7:58 a.m.

    The voters who elected the dishonorable, law-breaking Mr. Gates should recall him. What a sad reflection on those citizens, to retain such a tax-denying person as a state legislator.

    Does the state revenue (i.e. DFA) office not have a more powerful recourse for such lengthy and repeated noncompliance with the tax laws; laws that each of the rest of us comply with sacrificially each year?

    Too many legislators in Arkansas are acting as though they deserve special consideration and are above the law. It is way past time for our legislative and judicial systems and state agencies to do what is right and penalize these disgusting offenders to the maximum extent of the law. Enough ...with the wrist slapping!! Place them in jail with the other criminals for such extensive and repeated lack of tax filing and lack of payment.

    Pathetic, ... just as RBEAR states.

  • einnorray
    July 30, 2019 at 8:37 a.m.

    If he owes the State of Arkansas $300k for nonpayment of taxes, can you imagine how much he has cheated us on Federal taxes?

  • BunnyW
    July 30, 2019 at 10:18 a.m.

    So, anyone else think this attack is in retaliation to Rep Gates efforts to reform CPS?
    Anyone else think this is no contest plea because paying the fine is cheaper than continuing to pay lawyers? Having been falsely accused and dragged through the ',justice' (laugh) system, i see how easy it is to railroad innocent people.
    I support Rep Gates and wish to thank the voters for keeping him in the fight FOR US! Pray for the victims of CPS.

  • AnonymousinAR
    July 30, 2019 at 11:25 a.m.

    He needs his legislative salary to pay the back taxes. SO in reality the taxpayers are paying the taxpayers back. Incredulous. Wonder if he'll recuse on voting from any issues related to probation and parole. Maybe he could hold up legislation, like another recently convicted state senator did, for say the Arkansas Community Corrections budget to get better conditions of supervision. Wonder how many lunches he'll have with Kevin Murphy during the legislative session? Nothing surprises me anymore. But wait, can he still vote since he is on probation and has fines to pay? I understand this is a deferred agreement but he is still on felony probation. Hey Matt Shepherd why don't you get AG Rutledge to opine on that? As for McQuary comparing this to Bobby McAlister, McAlister is no longer a judge. They could have called for his resignation as part of the plea deal. Things that make you go hmmmmmm...

  • hah406
    July 30, 2019 at 11:54 a.m.

    I would think he could do a better job of reimbursing the public down on the farm at Tucker.

  • BoudinMan
    July 30, 2019 at 4:46 p.m.

    The only thing keeping this vermin in office is the "R" after his name.

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