DATE: Friday, August 1, 1997                TAG: 9708010714

SECTION: LOCAL                   PAGE: B5   EDITION: FINAL 

SOURCE: BY LYNN WALTZ, STAFF WRITER 

                                            LENGTH:   69 lines

2ND NBA REFEREE PLEADS GUILTY IN TAX SCHEME IF HE DOESN'T HELP PROSECUTORS, HE WILL LIKELY GET JAIL TIME, OFFICIALS SAY.

With fellow NBA referee Jesse Kersey poised to testify against him, George T. Toliver pleaded guilty Thursday to income tax evasion, halting his weeklong trial in a federal court in Harrisonburg.

Kersey pleaded guilty Wednesday afternoon, avoiding jail time by agreeing to testify in the trials of Toliver and two other NBA referees charged in an airline ticket scheme to earn tax-free income. He was scheduled to testify Friday in Toliver's trial.

If Toliver doesn't agree to cooperate as Kersey did, he will likely receive jail time at his October sentencing, prosecutors said.

Toliver admitted pocketing $38,335 in tax-free cash over a three-year period by providing bogus receipts to the NBA for first-class travel while he actually traveled less expensively.

The NBA deducts the price of the tickets from income statements, or W-2 forms, it submits to the IRS for each employee. Toliver admitted causing the NBA to reduce his income so he wouldn't have to pay taxes on the difference in the cost of the tickets.

``It seems like they risked an awful lot for a relatively small amount of gain,'' said Assistant U.S. Attorney Rick Mountcastle. ``That about sums it up. It seems that the NBA was paying them pretty well and that . . . greed got the better of Mr. Toliver.''

The NBA could not be reached Thursday for comment. Kersey, who lives in Williamsburg, resigned his 24-year career as an NBA referee after his guilty plea Wednesday. It was not known whether Toliver would do the same.

Toliver's attorney approached federal prosecutors Thursday morning before testimony resumed and had reached an agreement by lunch, Mountcastle said.

Unlike Kersey, Toliver's plea agreement did not call for cooperation with prosecutors. Instead, the agreement said prosecutors would take any cooperation into account at his sentencing.

Even if Toliver does cooperate, Mountcastle said, ``there is nothing to indicate he would get probation like Kersey.'' Kersey, who faced 15 years, got three years probation but no jail time. Kersey also agreed to pay a $20,000 fine and all back taxes.

The agreement called for Toliver's guilty plea on one count of filing a false income tax return and dismissing two charges in the filing of false income taxes and obstructing the Internal Revenue Service, which investigated the case.

Toliver used his own travel agency, with a branch office in Harrisonburg, to defraud the NBA. A group of about 16 other referees implicated in the investigation used a travel agency in South Carolina, court papers show.

Earlier this week, a travel agent testified that Toliver asked the agency to provide duplicate receipts for all his travel, one for first class, the other for cheaper fares.

In other testimony, NBA officials told the jury how referees could legitimately ``downgrade'' tickets and keep the difference as long as they paid taxes on the extra income. Court records show that the NBA repeatedly warned referees they could not keep the money tax-free.

Two other referees - Henry Clinger Armstrong of Virginia Beach and Mike Mathis of Cincinnati, Ohio - still face trial as a result of the two-year Internal Revenue Service investigation. Armstrong allegedly hid more than $100,000 of extra income. Mathis allegedly failed to report about $69,000.

Referees' salaries range between $77,000 and $224,000, depending on experience.

The investigation has shaken up the NBA and exposed widespread abuse of airline privileges, according to court documents and federal officials. The similarities in the cases are so striking that they have spurred speculation that the details of the scheme circulated among refs.

Armstrong and Mathis have been relieved of their duties, with full pay, pending the results of their trials. Toliver's status could not be confirmed. KEYWORDS: TAX EVASION GUILTY PLEA

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