Two brothers from Morris, Minnesota were sentenced for the white collar crime of tax evasion and conspiracy to defraud the United States. The 64-year-old and 62-year-old brothers were sentenced to three and one half years in prison yesterday in a federal court in Minneapolis. The brothers’ tax-evasion strategy incorporated the use of employee bonuses and the lack of payment for multiple federal and state taxes. The federal judge and federal prosecutor admonished the brothers saying their actions not only affected them but their community.
According to court documents the brothers’ ran their tax evasion plot from 1984 to August 2003. During that time period it is estimated the brothers retained more than $500,000 by not properly reporting information on federal and state tax forms. Around $100,000 of employee bonuses were not properly reported because the bonuses were not correctly recorded in the business’s payroll. The company the two brothers owned together did not properly report federal taxes like federal income tax, Medicare taxes, Social Security taxes and federal unemployment taxes. The brothers also failed to report state tax information as well. By not reporting certain state tax information like state unemployment benefits and state income tax, the brothers were also found to have defrauded Minnesota as well.
The brothers used the additional money to buy a time-share in Cancun, Mexico. The brothers also bought four motorcycles valued at $70,000. Seven months after they received their indictments, the two brothers pled guilty in April 2009. In addition to their prison sentences for the white collar crime, the two brothers have also been fined $250,000 each.
Source: Star Tribune, “A scolding and prison for Minnesota brothers’ two decades of business fraud,” Paul Walsh, 2/18/11