Tax Lawyer's Blog

Each year the IRS publishes examples of its non-filer enforcement actions. Below are the examples for fiscal year 2010. They are excerpts from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Mississippi Businessman Sentenced for Failing to File Tax Returns and Criminal Contempt

On November 30, 2009, in Jackson, Miss., Wiley Randolph “Randy” Kuyrkendall of Pearl, Mississippi, was sentenced to 46 months in prison, followed by one year of supervised release, for failure to file federal income tax returns and fleeing from his criminal trial. Kuyrkendall was also ordered to pay $443,806 in restitution to the Internal Revenue Service (IRS) and $3,113 to the U.S. District Court. 

According to court documents, Kuyrkendall, formerly a State Farm insurance salesman, was found guilty by a jury in August 2009 of failing to file income tax returns for the years 2002 through 2005, although he received almost $800,000 in gross income during those four years. The evidence during trial disclosed that Kuyrkendall had filed a federal civil lawsuit against the IRS seeking $1.1 billion and claiming that Congress did not have authority to tax. The court scheduled a pre-trial conference in the case for August 14, 2009, and the trial was set to begin on August 17, 2009. Kuyrkendall failed to appear on both dates and was arrested shortly thereafter by the U.S. Marshal Service.

Based on these actions, the court charged Kuyrkendall with two counts of criminal contempt for fleeing and failing to appear for those two court-scheduled events.

Detroit Area Businessman Goes to Jail for Tax Evasion

On November 25, 2009, in Detroit, Mich., Marc Bruce was sentenced to 16 months imprisonment, followed by three years of supervised release, and ordered to pay $328,085 in restitution to the Internal Revenue Service (IRS) and to file accurate back tax returns.  According to court records, during the 2001 through 2004 tax years, Bruce received over $890,000 in taxable income from his business M&C Trucking, Inc., and willfully failed to file tax returns with the IRS. 

Bruce also attempted to conceal his true and correct income from the IRS and failed to pay over $244,000 in tax due and owing. He also conducted business in cash and transferred his assets to nominees.

Florida Man Sentenced on Tax Evasion Charges

On November 23, 2009, in West Palm Beach, Fla., Carl Libertino, of Sebastian, Florida, was sentenced to 30 months in prison, to be followed by three years of supervised release, and ordered to pay $202,160 in restitution for unpaid taxes. Libertino pleaded guilty in July 2009 to tax evasion charges.

According to stipulated facts read in open court at the guilty plea, Libertino did not file personal income tax returns from 2004 through 2007.  During these years, Libertino received substantial income, in large part, from persons who believed they were investing their money through Libertino. To further conceal his income and evade taxes, Libertino operated mostly in cash, withdrawing amounts small enough to evade federal currency transaction reporting (CTR) requirements.

Rhode Island Couple Sentenced for Tax Evasion

On November 18, 2009, in Providence, R.I., Albert Martin and his wife, Lorraine Martin, were sentenced for committing tax evasion and conspiring to defraud the United States. Albert Martin was sentenced to 51 months in prison and three years of supervised release. Lorraine Martin was sentenced to 12 months and a day in prison and three years of supervised release.  In addition to the prison terms, Albert and Lorraine Martin were ordered to pay $463,988 in restitution to the U.S. Treasury. 

According to the indictment and evidence introduced during their trial, Albert Martin and co-conspirator, Bruce Lapierre owned and operated a Woonsocket-based machine shop from which they earned substantial income. From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal from the Internal Revenue Service (IRS) income that they earned through Classic Machine, and thus avoid paying taxes on that income.  Rather than open business accounts for depositing business receipts and income, they allegedly used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous “private” banking service designed to conceal income from the IRS.

The evidence also showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises.  The defendants also made extensive use of cash and money orders. In October 2009, Lapierre was sentenced to 51 months in prison for his role in the scheme.

Las Vegas Business Owner Sentenced To 15 Years in Prison for Tax Fraud Scheme

On November 16, 2009, in Las Vegas, Nev., Robert Kahre and his sister, Lori Kahre, were sentenced to 190 months and 72 months in prison, respectively. Both were found guilty in August 2009 of conspiring to defraud the federal government for the purpose of impeding the Internal Revenue Service (IRS) in its collection of income and employment taxes.

According to information presented in court, between 1997 and 2003, Robert Kahre owned and operated six construction-related businesses in Las Vegas and paid employees over $100 million in cash wages. Additionally, Kahre provided a payroll service to approximately 35 other construction contractors who employed thousands of employees. Robert and Lori Kahre devised and used a payroll scheme that concealed and disguised the true amount of income received by his employees and the employees of the companies for which he provided payroll services.

Robert Kahre claimed to pay employees in gold or silver coins, but which were actually immediately exchanged for pre-determined envelopes of cash. The face amount of the coins was one-eighth the amount of pay that the employee actually earned and received in the cash envelope. The defendants told the employees that the income was either not taxable or that they should falsely report their income to the IRS at the face amount of the gold and silver coins.

During the course of the scheme, cash wage payments of at least $25 million were paid to Robert Kahre’s employees and cash payments of approximately $95 million were paid to the employees of the other contractors. No federal tax withholdings were made from the paychecks, and the wages were not reported to the IRS. The defendants took steps to hide the correct amount of income paid to the employees by using false invoices, keeping two sets of books, using false names on payroll records, making false statements on mortgage applications, and using nominees to conceal assets. In addition to the payroll scheme,

Robert Kahre was convicted of evading personal income tax on approximately $12 million in income for the years 1999 through 2002; Lori Kahre was convicted of evading personal income tax on approximately $242,882 in income for the years 1998 and 2000 through 2005.

Maine Man Sentenced on Federal Tax Evasion Charges

On November 16, 2009, in Bangor, Maine, Richard J. Thomas was sentenced to 24 months in prison, three years of supervised release, and ordered to pay $15,082 in restitution and a $100 special assessment. The supervised release conditions required, among other things, that Thomas report to the Internal Revenue Service (IRS) true and accurate tax returns for the years 1995 through 2008. On January 11, 2006, Richard Thomas, a local chiropractor, was indicted on six counts of tax evasion from 1995 through 2001 (excluding 1997). Thomas pleaded guilty on February 2, 2009 to tax evasion for tax year 2001. 

According to court documents, Thomas owed substantial income tax for the year in question, but he willfully attempted to evade tax assessment for that year. Prior to 1995, Thomas had filed tax returns, which indicated he was aware of his duty to file tax returns.

Former Connecticut Resident Sentenced to Prison for Evading Taxes; Structuring Cash Deposits

On October 23, 2009, in Hartford, Conn., Eugene Cappello was sentenced to 24 months in prison, to be followed by two years of supervised release, for failing to pay more than $237,000 in federal taxes and structuring cash deposits.  Cappello was also ordered to pay a $5,000 fine and to pay approximately $403,000 in back taxes, penalties and interest.  In addition, Cappello was ordered to forfeit $39,500.  According to court documents and statements made in court, in August 2000, Cappello was contacted by the Collection Division of the Internal Revenue Service (IRS) for non-payment of taxes related to his 1997, 1998 and 1999 individual income tax returns. 

After that Cappello made only nominal payments toward his total balance due and, in May 2004, he submitted a signed document to the IRS documenting his purported inability to pay the more than $237,000 in taxes and interest that he owed for his 1997 through 2003 tax returns. During this period, Cappello hid cash from the IRS and made significant personal expenditures, including $34,781 for a country club membership and $91,000 for a yacht.  In addition, Cappello had a house built by making more than $350,000 in cash payments to building contractors. To help hide his assets from the IRS, Cappello had his paychecks issued in the name of another individual.  Further, he directed this person to structure cash deposits into two different bank accounts. 

South Carolina Man Gets Prison for Income Tax Evasion

On October 22, 2009 in Columbia, S.C., Barry Lusk was sentenced to 33 months in prison and three years supervised release for failing to pay income tax. According to court documents, Lusk was the sole operator of two businesses that he sold for nearly $1.5 million in 2000. Lusk used the proceeds to buy houses, real estate and purchase an airplane instead of paying the taxes due on the sale of the businesses. Lusk was part of a movement advocating income tax was not applicable to him and sent a letter to the Internal Revenue Service (IRS) detailing his beliefs. 

In 2002 the IRS began a civil audit of Lusk and an IRS representative attempted to contact Lusk regarding his responsibility to file an individual tax return for the year 2000. In 2003, Lusk filed a joint 1040 return for 2000 and claimed that he and his spouse had no income and that there was no tax due or owed. However, he asked for a refund of an estimated tax which had been paid in 2000. Lusk also filed amended tax returns for two prior tax years attempting to get refunds claiming the original returns were filed in error. Lusk’s income was estimated at more than $843,000, with a tax debt of more than $183,000.

Anchorage Man And Wife Sentenced for Conspiracy to Defraud the IRS

On October 16, 2009, in Anchorage, Alaska, Eugene and Lorna Warner, of Anchorage, were sentenced in federal court for their convictions of conspiracy to defraud the Internal Revenue Service (IRS). Eugene Warner was sentenced to 37 months in prison, three years of supervised release and fined $15,000. Lorna Warner was sentenced to five years probation, including ten months of home confinement, and fined $8,000. Both defendants were ordered to file accurate tax returns from 1991, through present, make a good faith attempt to pay all back taxes, interest, and penalties to IRS, and comply with the tax laws. According to information presented to the court, the defendants were charged in a 37-count indictment with conspiracy to defraud the IRS, obstruction of the IRS, filing false tax returns, mail fraud, and making false claims against the United States. 

Eugene Warner was also charged with bankruptcy fraud. On July 30, 2009, both defendants entered guilty pleas to the charge of conspiring to defraud the United States. Both defendants were previously convicted in 1997 of obstructing the IRS and sentenced to 18-month prison terms. According to the indictment, the defendants engaged in a course of conduct intended to evade the payment of lawful debts, conceal assets from creditors, and obstruct collection activities by those creditors.

The defendants attempted to evade these debts by concealing assets in nominee entities, so that their names did not appear as the owners of the property. They then failed to disclose his ownership of the property in documents filed with the United States District Court, the United States Bankruptcy Court, and the IRS.  They were also accused of mailing worthless “International Bills of Exchange” to the IRS and other creditors in an unsuccessful attempt to pay off their debts. In their plea agreement and in open court, the Warners admitted that, as a part of the conspiracy, they both made false statements to the IRS about his assets, omitting real property and bank accounts held in the name of bogus nominee “trusts.” They also admitted sending to the IRS a sworn “commercial affidavit” that falsely claimed that the IRS owed them $1.5 million. 

Eugene Warner further admitted that he testified falsely before the U.S. Bankruptcy Court about his assets in a 2003 hearing.

Washington State Man Sentenced in Fraudulent $3.2 Million Consumer Debt Discharge Program

On October 15, 2009, in Spokane, Wash., Jason Paul Christensen, formerly of Pasco, Washington, was sentenced to 109 months of imprisonment, to be followed by three years of supervised release. Christensen was ordered to pay $3,238,997 in restitution to the victims of his scheme. According to court documents, Christensen fraudulently obtained $3.2 million from over 1,300 victims across the country through a Ponzi-type scheme advertised as a debt elimination program.

Christensen pleaded guilty on April 16, 2008, to mail fraud and money laundering charges relating to the scheme he engaged in over a period of about three years through the Internet and a post office box business address in Richland, Washington. In his plea agreement, Christensen admitted that between approximately October 15, 2003, and December 31, 2005, he solicited his victims via websites on which he advertised that his company employed a team of federal attorneys who used loopholes in the law to discharge consumer debts.  When in fact, he did not employ any team of attorneys and no such legal loopholes existed. Christensen promised his customers that his company would fully discharge their debts, his program was 100 percent successful, and customers were guaranteed success or would receive their money back. Customers, however, were required to pay Christensen’s companies amounts of at least $2,500 and as much as $20,970 in advance. He obtained the large number of victims by paying off the loans of some of his “clients” with other victims’ money and then recruiting his satisfied “clients” to become his “consultants” to whom commissions were paid for recruiting their family and friends into the program. After paying his “consultants” their commissions to promote the scheme, Christensen pocketed the rest of the proceeds for his personal use.

In total, the scheme netted over $3.2 million from victims seeking debt elimination and located all over the United States.

Rhode Island Machine Shop Owner Sentenced to 51 Months for Tax Crimes

On October 7, 2009, in Providence, R.I., Bruce Lapierre of Pascoag, R.I., was sentenced to 51 months in prison and ordered to pay $463,988 in restitution. In March 2009, Lapierre and his co-defendants, Albert and Lorraine Martin, were convicted of conspiracy to defraud the United States and tax evasion.  According to the indictment and evidence introduced at trial, Lapierre and Albert Martin owned and operated Classic Machine, machine shop based in Woonsocket, R.I.  From 1997 to 2004, the defendants engaged in an elaborate scheme to conceal income from the Internal Revenue Service (IRS). 

Rather than open business accounts for depositing business receipts and income, they used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous “private” banking service.  Trial evidence showed that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises and Royal Enterprises.  The defendants also made extensive use of cash and money orders. 

Additionally, evidence presented at trial showed that Lapierre tried to obstruct an IRS investigation of the machine shop’s income by renaming business assets, by sending false and frivolous letters to the IRS claiming he was not required to file tax returns or pay taxes, and by directing a financial institution not to comply with an IRS summons for records. Sentencing for Albert and Lorraine Martin is scheduled for a later date.

Kentucky Chiropractor Sentenced to 21 Months for Failing to File Tax Returns

On October 1, 2009 in Paducah, Ky., Charles Boulton was sentenced to 21 months in prison, one year of supervised release, and ordered to pay nearly $95,000 in restitution for failing to file personal income tax from 2001 to 2006.  According to court documents, Boulton, a provider of drug and alcohol tests to truck driving schools and transportation companies in Western Kentucky, earned nearly $496,000 from 2001 to 2006 and did not file tax returns.