As Tax Day approaches, the U.S. Attorney’s Office reminds all Minnesotans that the deadline for filing federal income tax returns is Tuesday, April 17. To underscore federal law enforcement’s commitment to pursue those who fail to pay their taxes or otherwise defraud the tax system, below are several tax and related fraud prosecutions in the District of Minnesota. In addition to potential criminal penalties, including incarceration, tax evaders remain responsible for all taxes and interest due, as well as civil monetary penalties.
“Tax fraud unfairly shifts the tax burden to honest American taxpayers," said U.S. Attorney Greg Brooker. “The U.S. Attorney’s Office for the District of Minnesota and the St. Paul Field Office of the Internal Revenue Service’s Criminal Investigation vigorously investigate and prosecute tax fraud and other financial crimes."
“Year-round efforts of IRS Criminal Investigation are directed at those Americans who willfully and intentionally violate their legal duty to voluntarily file lawful and accurate tax returns and those individuals who commit other related financial crimes," said Hubbard Burgess, Acting Special Agent in Charge of the St Paul Field Office. “Prosecutions of individuals committing tax fraud are a vital element in fostering confidence in our tax system and compliance with the law."
JOSEPH ARNOLD MCGLYNN, of Burnsville, was sentenced to 30 months in prison for failing to pay over his employees’ withheld employment taxes to the IRS. Between 2009 and 2016, MCGLYNN was the owner, CEO and President of United Credit Consulting (UCC), a credit repair service company located in Burnsville. MCGLYNN withheld the employment taxes from his employees’ wages, but failed to pay over the taxes to the IRS for many quarters. Instead, MCGLYNN used the money to fund a lavish lifestyle, including luxury vacations, rentals of luxury vehicles, visits to strip clubs and purchases of luxury items such as jewelry, handbags and a boat. In total, MCGLYNN failed to pay to the IRS at least $159,157 in employment taxes.
ROYLEE BELFREY and THURLEE BELFREY, of St. Paul, and LANORE BELFREY, of Minnetonka, operated multiple home health care businesses and over several years committed a multi-million dollar heath care fraud, conspired to defraud the U.S., and failed to pay over almost $4 million in employee withheld taxes. Instead of paying over their employees’ withheld taxes to the IRS, they directed and permitted the money to be spent for other purposes, including for their own personal use. ROYLEE BELFREY was sentenced to 60 months in prison and ordered to pay $4,592,593.74 in restitution. THURLEE BELFREY was sentenced to 96 months in prison and ordered to pay $8,944,036.82 in restitution. LANORE BELFREY was sentenced to 15 months in prison and ordered to pay $402,158.00 in restitution. Related to the BELFREY investigation, the former mayor of Stillwater, KENNETH HARYCKI pleaded guilty to one count of conspiracy. HARYCKI was sentenced to 12 months and one day in prison and ordered to pay more than $2 million in restitution.
DIANE L. KROUPA, a former Federal Tax Court judge, of Minnetonka, was sentenced to 34 months in prison, and her husband, ROBERT E. FACKLER was sentenced to 24 months in prison for tax offenses. Between 2002 and 2012, KROUPA and FACKLER conspired to obstruct the IRS by falsifying and reporting personal expenses as business expenses on their joint tax return. For several years, they fraudulently deducted at least $500,000 of personal expenses as business expenses. FACKLER also failed to report approximately $450,000 of income earned from his business, Grassroots Consulting. KROUPA and FACKLER fraudulently understated their income by approximately $1,000,000 and fraudulently understated the amount of tax they owed by at least $450,000.
JOHN BURWOOD ROBINSON, of Crystal, was sentenced to 33 months in prison and ordered to pay $624,132 in restitution for stealing more than $1.1 million from his employer. ROBINSON pleaded guilty to mail fraud and filing a false tax return. ROBINSON was employed as the controller for North Central Stamping & Manufacturing, Inc. (“NCSMI") from 1991 through 2016. In that role, ROBINSON devised a fraud scheme to steal money from NCSMI by opening a bank account in the name of NCSMI without the company’s knowledge or authorization, depositing customers’ payments into the fraudulent bank account, and using the deposits for his personal expenses.
MICHAEL TOBAK of Wayzata was sentenced to 24 months in prison for filing a false tax return. During an eight-year period, TOBAK failed to report more than $3.3 million in income from his non-profit home health care company, International Health Care Services. As a result, TOBAK failed to pay an additional $1,851,640 in taxes.
HASSAN OSMAN, of Minneapolis, was sentenced to 108 months in prison on charges of conspiracy, aiding and assisting in the preparation of a false tax return, and unlawful flight from prosecution. OSMAN and two co-conspirators filed more than 80 fraudulent tax returns for years 2008-2010 attempting to obtain close to $1 million in tax refunds.
Source: U.S. Department of Justice, Office of the United States Attorneys
