UTV WEDNESDAY 02/07/2003 15:07:52  FBI spy in IRA 'was subject of fraud probe' An FBI agent testifying against alleged Real IRA chief Michael McKevitt owed the US Government $750,000 (£450,000) in unpaid taxes after his business collapsed, he said today.  By:Press Association  Former trucking company boss David Rupert was also investigated for fraud and recruited to go undercover in an operation targeting drug dealers and a female police officer in New York state, a court was told. Mr Rupert, the star witness in the trial of McKevitt, 53, was forced to declare himself bankrupt for a second time in 1992 after one of his lorries was involved in a horrific road crash which killed three children. His evidence is crucial to the state`s case against McKevitt, of Blackrock, Dundalk, County Louth, who denies directing the Real IRA and being a member of the organisation which killed 29 people in the August 1998 Omagh bomb atrocity. During cross-examination at Dublin Special Criminal Court, he admitted withholding employees` tax contributions in a doomed bid to keep his firm afloat. With the Inland Revenue Service chasing him for the money, he told the court: ``The penalties are brutal.`` The bills kept mounting and at one stage the authorities tripled their repayment demands. ``In the end it was up around 750,000 dollars,`` he said. IRS officials told him he could either win the lottery, make a special arrangement with the government or keep his money hidden for a decade, the court heard. During negotiations in Chicago, where he had moved to in March 1993, Mr Rupert claimed he was told: ``If I could sit it out for 10 years, it would become moot.`` All his operating funds were then transferred over to his third and later fourth wives or else kept in cash, he said. Defence counsel Hugh Hartnett SC replied: ``You had 10 years in front of you in which you had to lie low and hide your source of income from the revenue. That`s a difficult thing to do.`` But Mr Rupert insisted: ``Not as difficult as one might think in a country of 260-something million people.`` The businessman was paid a total of 1.25 million US dollars (£750,000) by the FBI and later MI5 to infiltrate dissident republican groupings during the 1990s. Earlier he had told the court about his first bankruptcy in 1974 and about a civil action taken against him for two bounced cheques. Asked by Mr Hartnett if he told the FBI about his background when they first approached him to spy on dissident republicans, Mr Rupert said he believed the bureau already knew. ``I had assumed that they would have this big magic computer and pulled up everything they could find out about me.`` He also denied being on the run from the authorities, but Mr Hartnett said: ``You were under investigation for wire fraud from the FBI.`` Asked by the judge to explain what this was, the barrister described it as an offence involving fraudulent use of mail for financial transactions. Mr Rupert insisted he had no idea about this probe until two years` ago by which time he had begun work as a double agent. Mr Hartnett said there were striking similarities about Mr Rupert`s decision to spy for the FBI after his business went bust in the early 1990s and his agreement to work undercover with a detective in New York in 1974 after his first trucking company went to the wall. Mr Rupert had agreed to help target drug dealers by making purchases following an approach by a state trooper named Lee Page who was his friend. After the court was told the operation centred around the marijuana trade Mr Hartnett asked: ``You had signed up as an undercover narc?`` Mr Rupert claimed however that he did not necessarily find the role exciting. Amid laughter from the courtroom, he added: ``I didn`t want to be in the house because my first wife was a bit of a bitch.`` The FBI began probing allegations of fraud against Mr Rupert following a road tax dispute between his trucking company and a firm they acted as agents for which spiralled from 50,000 dollars to 655,000 dollars, the court was later told. Mr Hartnett asked him: ``They brought a claim against you effectively where they accused you of embezzling money?`` But Mr Rupert insisted he knew nothing about the investigation until the criminal case started later. It was during this period in 1993 that Federal Agent Buckley first visited his offices to ask him to infiltrate dissident republican groupings. According to Mr Rupert, however, he thought the FBI wanted to probe the activities of 25 to 30 black and Serbian drivers employed by him. ``I thought I had been around in the trucking business until I went to Chicago,`` he said. ``I found out I was just a pup.`` Asked by the defence to explain what he meant, he claimed that his drivers` were just on leased contracts with little control over them. ``There`s every type of scheme and game and freight theft and stealing fuel. That was what I was concerned about,`` he said. Challenged by Mr Hartnett if illegally moving cash via the mail or wires was common in the US haulage industry, he replied: ``I had done nothing that was outside the normal business practices in an agent-company relationship.`` The firm who took the action against him, B & W Cartage, had also paid for his first trip to the Cayman Islands just weeks before one of Mr Rupert`s earlier companies went bankrupt in 1992, the court was told. Mr Rupert also claimed two of its senior bosses, Norm Klein Snr and Ted Vance, had ``done hard time`` for breaking up unions in Chicago. He added: ``I thought from being felons they might have a more knowledgeable view on wire fraud and attempting to bring charges against me.`` The trial was adjourned until tomorrow.