Alamo’s business was target of lawsuits, IRS inquiries
Posted on Sunday, September 21, 2008
Known for designing glitzy, dazzling jackets worn by the likes of Michael Jackson and Elvis, pastor Tony Alamo’s business was also the target of many lawsuits and Internal Revenue Service inquiries.
Most recently, in 1994 prosecutors charged Alamo with income tax violations in U. S. District Court, saying Alamo understated his income in 1985 and didn’t file tax returns from 1986 through 1988.
“I’m fighting for the freedom of religion,” Alamo told the court, while arguing that he didn’t receive a salary and used businesses to spread the gospel.
Alamo and his wife started the Tony and Susan Alamo Foundation with a thrift store, church and coin-operated laundry by the time the IRS granted it taxexempt status in 1974.
By 1982, the foundation had grown to 37 businesses, 30 of which were in Arkansas, including a grocery store, restaurant and gas station.
The string of businesses through Alamo’s church expanded to include restaurants, hotels, an Arkansas hog farm and a fancy clothing store in Nashville, Tenn. Alamo produced designer denim jackets on his 250-acre commune near Dyer in Crawford County. With about $ 2 million in revenue each year, the businesses, located mainly in Arkansas, California and Tennessee, were staffed by followers, who provided labor in return for room, board and pocket money.
The IRS revoked the foundation’s tax-exempt status in 1985, after determining that it was being used for personal gain.
Alamo’s defense argued that since the businesses were part of a nonprofit foundation, he didn’t have to file personal income tax returns. Plus, the businesses were run to provide food and shelter to his followers, they said.
He lost and was sentenced to six years in prison and fined $ 210, 000.
Alamo filed for bankruptcy in June 1992, after agreeing to pay $ 5 million to settle a 15-year dispute with the U. S. Department of Labor because he paid his workers less than minimum wage and didn’t pay them overtime.
A federal bankruptcy judge dismissed Alamo’s Chapter 7 bankruptcy petition in 1995 after finding he had no personal or corporate assets to liquidate to pay his creditors.
At that time, his debts included $ 6. 6 million owed in federal taxes, the $ 5 million owed to the Department of Labor, $ 2. 1 million owed to six former followers and $ 500, 000 in disputed attorney fees owed to the former followers’ attorney.
Most of Alamo’s designer jean jackets were used to start paying off his debts. The last of the Arkansas items seized in 1990 were auctioned in March 1995. Rhinestones, 2, 500 hand-decorated jackets and stereo speakers were among items valued at $ 56, 000, and the first 350 of the jackets went for $ 35, 165. That July, the IRS sold an autographed belt from Elvis and design notes for a leather jacket created for Michael Jackson as part of an auction from the Nashville store.
According to the Secretary of State’s Web site Saturday, two corporations from the Alamo group still exist in the state: Music Square Church and the Tony and Susan Alamo Foundation, both listed as in good standing.
TonyAlamoDesigns. com shows many of “the Godfather of Glitz” products, along with magazine articles and covers featuring the designs. A person who did not give her name answered the phone number given for the Texarkana, Texas-based office. She said she could pass on a message but refused to answer any questions about whether the site was owned by Alamo or if he still produced jean jackets.
The message was not returned by Saturday evening.
The online auction site Ebay, also has people auctioning Alamo’s designs.
Joe Frawley, owner of Armadillo’s Hands in Little Rock, said Alamo no longer makes the jackets. He bought about $ 20, 000 to $ 30, 000 worth of the flashy products — including about 100 jackets — when Alamo went out of business about 10 years ago, Frawley said.
He still has about 15 jackets left that he priced at about $ 1, 000 each, and he sold one about a month and a half ago, he said. The jackets are so popular that he’s had a woman fly in from New York just to purchase them.
The appeal for Alamo designs is still strong, he said.
“I’ve been selling clothes for 40 years, and I just think there’s nothing else like ’em,” he said, adding that one featuring Superman on it is “cooler than heck.” Information for this article was compiled from archives of the Arkansas Democrat-Gazette.
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