I-Team: New twists in the Area 51 tax case - 8 News NOW

I-Team: New twists in the Area 51 tax case

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LAS VEGAS -- A nasty tussle between state tax officials and leaders in Lincoln County has taken a new set of twists and turns.

At the heart of it all is the top secret Area 51 military base and the amount of taxes paid by contractors out there who are working on who-knows what.

As the I-Team first reported weeks ago, Lincoln County cut a deal that would increase its tax payments from Area 51, but when the state tax commission started asking questions about how the deal was reached, a wall of secrecy came down and harsh words started flying.

“I laughed. I gotta admit, I laughed. Obviously, we struck a real raw nerve with this guy,” George Kelesis with the Nevada Tax Commission said.

Kelesis, who is a tax attorney, had to chuckle when he first read the court motion filed by the District Attorney for Lincoln County.

It is the legal equivalent of an obscene gesture; Lincoln County telling state tax officials to butt out. It mirrors what the Nevada Tax Commission heard during a special meeting in mid July, where DA Dan Hogue and County Commissioner Ed Higbee were grilled about a deal that had been cut with the Air Force regarding tax payments from the top secret Area 51 military base.


The two witnesses repeatedly said they could not answer questions about the deal because they had signed non-disclosure agreements with the Pentagon, supposedly because everything at Area 51 is classified. Commissioners suspected the secrecy had more to do with the county's own behavior, not national security.

“The people who were there were really offended, and the clear attitude was, ‘how dare you ask us a question,’” Kelesis said.

Here is the issue in a nutshell. Lincoln County is hurting, almost broke. The largest employer in the county is Area 51. The county cannot tax a military base, but it can tax the private contractors who work out there.

For years, the county received a pittance from the Air Force but, since the assessor was not cleared to step foot on the base, the office had to rely on satellite photos toguesstimatee the taxes owed.

Enter Ashley Hall, a politically connected consultant and former Air Force officer, who pitched the county with an idea, he would get more tax money out of Area 51, but wanted to keep 25 percent of anything he collected.

The county agreed, even though one of Hall's key employees in the deal is the first cousin of Lincoln County Commission Chairman Ed Higbee. Hall got the Air Force to agree to pay an extra $1.8 million.

Four days later, Hall and Higbee signed a separate agreement about how Hall would be paid and for how long. Lincoln County, nearly broke, agreed to fork over close to half a million dollars to Hall. DA Hogue advised the county that the money was a settlement, not tax revenue, which meant it did not have to be allocated like other tax revenue, with portions going to the county's ailing school, fire and hospital budgets.

Tax commissioners found out about the deal and thought the whole thing smelled fishy.

“The question is, what efforts did Lincoln County take to collect this tax prior to retaining this consultant, and it was clear none were taken. And that is distressing. They didn't call the tax division. They didn't call the governor. They didn't call anybody. They simply made this agreement and went forward,” Kelesis said.

During the July meeting, Kelesis grilled county officials about the deal.

“Why can't you talk to us and what did you sign?” Kelesis asked county officials.

But when county officials either couldn't or wouldn't answer, the commission voted to issue subpoenas for records and witnesses. Nine days later, Lincoln County filed for an injunction to stop the state probe.

The motion said Commissioner Thom Sheets had intimidated and threatened county officials and that Kelesis had lied and attacked their character. The Lincoln County newspaper defended the deal, saying everything had been open and above board.

“I was astounded when we were simply in the process of trying to determine what happened and how it happened,” Kelesis said.

Four days after Lincoln County went to court to stop the state investigation; it reversed itself, decided to drop the lawsuit, and asked the state if the two sides could work something out instead.

Commissioner Kelesis thinks that someone must have realized that a court battle would shine even more light on the Area 51 deal.

The whole dispute could come to a head Monday when the tax commission will hold its next meeting.

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