Mich. State Representative and Siblings Sued by Federal Government

March 31, 2006

A federal lawsuit filed against a Michigan state representative and three of his siblings accuses them of converting the proceeds of their father’s two life-insurance policies to their own use, thereby subverting tax liens that had been placed on the payments.

The Internal Revenue Service is seeking to reclaim $47,891 in benefits from Rep. E. David Farhat, R-Muskegon, and his siblings – Dianna M. Farhat and Daniel R. Farhat, who both live in Michigan, and Deborah D. Farhat, who lives in Florida – to be applied toward their parents’ unpaid 1993 and 1994 taxes.

With interest and penalties, the tax liability of the parents’ estate has grown from $242,612 to $589,000, according to the complaints filed this month in federal courts in Grand Rapids and Fort Lauderdale, Fla.

The government said it filed liens against Edmund Farhat’s life-insurance policies in 1995 and 1996 to recoup a portion of the unpaid taxes. When he died in 1998, the benefits were paid to his children.

The family’s attorney, Andrew Abood, said the lawmaker and his siblings were unaware of the alleged debt until early this year. Abood said he is working to settle the case.

Abood questioned whether the liens were properly placed on the insurance policies. If they had been, the money should not have been paid to the beneficiaries, he told The Grand Rapids Press for a story published Tuesday.

David Farhat said he expects the suit to be settled but referred other questions to Abood.

Farhat, who is seeking re-election against Democratic challenger Mary Valentine, represents a large part of Muskegon County and Ottawa County’s Chester Township. He was elected in 2002.

Information from: The Grand Rapids Press, www.mlive.com/grpress.

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