Former Tax Court Judge Kroupa Indicted for Tax Evasion

[jcolvin2]

https://www.justice.gov/usao-mn/pr/form ... ax-evasion


Department of Justice

U.S. Attorney’s Office

District of Minnesota



FOR IMMEDIATE RELEASE



Monday, April 4, 2016

Former United States Tax Court Judge and Husband Indicted for Conspiracy to Commit Tax Evasion and Obstruction of an IRS Audit

Kroupa and her husband conspired to evade more than $400,000 in federal taxes







United States Attorney Andrew M. Luger today announced a federal indictment charging DIANE L. KROUPA, 60, and her husband, ROBERT E. FACKLER, 62, with conspiring with each other to evade assessment of taxes.[1] Each defendant is charged with conspiracy, tax evasion, making and subscribing false tax returns and obstruction of an IRS audit. The defendants are expected to appear later this week in U.S. District Court in Minneapolis, Minn.

“The allegations in this indictment are deeply disturbing,” said United States Attorney Andrew Luger. “The tax laws of this county apply to everyone, and those of us appointed to federal positions must hold ourselves to an even higher standard.”

“As a former tax court judge, Kroupa dealt regularly with individuals who cheated on their taxes, which makes these allegations particularly troubling,” said Richard Weber, Chief, IRS - Criminal Investigation. “Reporting personal expenses as business expenses on your tax returns is not tolerated, regardless of your job or position. We expect all taxpayers to follow the law –whether you are a business owner, individual, or government official – we all must play by the same rules and pay our fair share.”

According to the indictment and documents filed in court, between 2004 and 2012, KROUPA and FACKLER conspired to evade their tax obligations. KROUPA was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years, but she retired on June 16, 2014. During the same period, FACKLER was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, KROUPA and FACKLER owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland.

According to the indictment and documents filed in court, as part of the conspiracy to defraud the United States, KROUPA and FACKLER fraudulently claimed personal expenses as Grassroots Consulting business deductions. They fraudulently claimed the following personal expenses as deductible business expenses: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, The Bahamas, China, England, Greece, Hawaii, Mexico and Thailand.

According to the indictment and documents filed in court, KROUPA and FACKLER made a series of other false claims on their tax returns, including failing to report approximately $44,520 that KROUPA received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.

According to the indictment and documents filed in court, in 2006, KROUPA and FACKLER concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit. During a second audit in 2012, KROUPA and FACKLER caused misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting.

According to the indictment and documents filed in court, between 2004 and 2010, KROUPA and FACKLER purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $400,000.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.

Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.

Defendant Information:

DIANE L. KROUPA, 60
Minnetonka, Minn.

Charges:
•Conspiracy to defraud the United States, 1 count
•Tax evasion, 2 counts
•Making and subscribing, 2 counts
•Obstruction of an IRS audit, 1 count



ROBERT E. FACKLER, 62

Minnetonka, Minn.

Charges:
•Conspiracy to defraud the United States, 1 count
•Tax evasion, 2 counts
•Making and subscribing, 2 counts
•Obstruction of an IRS audit, 1 count

Copy of the indictment:
https://www.justice.gov/usao-mn/file/838191/download

[Famspear]

Yikes........

[The Observer]

Well, at least they weren't relying on Pete Hendrickson's insightful and masterful interpretation of the US Tax Code.

[Number Six]

http://www.forbes.com/sites/robertwood/ ... 40d5813779

You have to wonder what she was thinking and why she thought she wouldn't get caught.

[Duke2Earl]

Humans seem capable of rationalizing literally anything. I knew a partner in a major accounting firm that went ahead and engaged in obvious insider trading AFTER being informed that they were under SEC investigation.

[Famspear]

......I knew a partner in a major accounting firm that went ahead and engaged in obvious insider trading AFTER being informed that they were under SEC investigation.

Good grief.

[jcolvin2]

Former Judge Kroupa was sentenced to 34 months in prison:

https://www.justice.gov/usao-mn/pr/form ... -tax-fraud


Department of Justice
U.S. Attorney’s Office
District of Minnesota
FOR IMMEDIATE RELEASE
Thursday, June 22, 2017

Former United States Tax Court Judge And Husband Sentenced For Multi-Year Tax Fraud Conspiracy

Defendants conspired to defraud the IRS of more than $450,000 in taxes

Acting United States Attorney Gregory G. Brooker today announced the sentencing of a former United States Tax Court judge and her husband for conspiring to defraud the United States. DIANE L. KROUPA, 61, was sentenced to 34 months in prison and ROBERT E. FACKLER, 63, was sentenced to 24 months in prison. Both defendants entered guilty pleas and were sentenced earlier today before Judge Wilhelmina M. Wright in U.S. District Court in St. Paul, Minn. In addressing KROUPA’S extensive tax fraud committed while a sitting US Tax Court Judge, Judge Wright stated, “When a person in a position of trust violates that trust, the public is a victim,” and further noted that KROUPA’S fraud undermined the trust in the justice system.

“Over a nearly ten-year period, the defendants engaged in a deliberate and brazen tax fraud scheme,” said Acting United States Attorney Gregory Brooker. “Considering Ms. Kroupa’s position of public trust as a US Tax Court Judge, her crime is particularly egregious. Ms. Kroupa used her knowledge of the tax laws to further their fraud scheme, conceal their criminal conduct and maintain their acquisitive lifestyle. The sentences handed down today show that no one is above the law.”

“Diane Kroupa held a position of public trust as a federal tax court judge and made rulings based on the very tax laws she broke. She broke that trust when she thought she was above the law and committed the same crimes as those who appeared before her in court over the past decade,” said Hubbard Burgess, Acting Special Agent in Charge, IRS-Criminal Investigation. “Everyone in society must play by the same rules and IRS-CI will protect the integrity of the tax system by ensuring everyone pays their fair share, including federal officials.”

“The Postal Inspection Service will aggressively investigate all individuals, regardless of your job title, who chose to commit fraud. Today’s sentencing of Ms. Kroupa, a former U.S. Tax Court Judge, should send a clear message to those individuals contemplating committing fraud by using the US Mails. Don’t do it,” said Craig Goldberg, Postal Inspector in Charge of the Denver Division which covers the Twin Cities.

According to the plea agreement and documents filed in court, KROUPA was a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, KROUPA was married to FACKLER, a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, KROUPA and FACKLER owned a home in Plymouth, Minnesota. From 2007 to 2013, they also leased a second residence in Easton, Maryland, where KROUPA lived while fulfilling her duties as a Tax Court Judge in Washington DC.

According to the plea agreement and documents filed in court, between 2002 and 2012, KROUPA and FACKLER conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, KROUPA and FACKLER worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, KROUPA prepared and provided to FACKLER summaries of personal expenses falsely described according to business expense categories. On other occasions, KROUPA herself compiled and provided to their tax preparer the fraudulent personal expenses.

According to the plea agreement and documents filed in court, as part of the conspiracy, FACKLER also caused Grassroots Consulting business receipts to be understated by approximately $450,000 by fraudulently deducting purported business expenses which had previously been reimbursed. As a result, the defendants caused the amount of adjusted gross income, taxable income, and total tax shown on their income tax returns to be falsely understated.

According to the plea agreement and documents filed in court, KROUPA and FACKLER made a series of other false claims on their tax returns, including failing to report approximately $44,520 that she received from a 2010 land sale in South Dakota. The defendants also falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.

According to the plea agreement and documents filed in court, KROUPA and FACKLER purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns. During a second audit in 2012, KROUPA and FACKLER caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, KROUPA and FACKLER removed certain items from their personal tax files before giving them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. During the audit, KROUPA also falsely denied receiving money from the 2010 land sale. Later, when they learned the 2012 audit might progress into a criminal investigation, KROUPA instructed FACKLER to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.

According to the plea agreement and documents filed in court, between 2004 and 2010, KROUPA and FACKLER purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.

Assistant U.S. Attorneys Benjamin Langner and Timothy Rank prosecuted the case.

Defendant Information:

DIANE L. KROUPA, 61

Minnetonka, Minn.

Convicted:
•Conspiracy to Defraud the United States, 1 count

Sentenced:

•34 months in prison

•Three years of supervised release

•$457,104 joint restitution

ROBERT E. FACKLER, 63

Minnetonka, Minn.

Convicted:

•Obstruction of an IRS audit, 1 count

Sentenced:

•24 months in prison

•One year of supervised release

•$457,104 joint restitution

###

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United States Attorney’s Office, District of Minnesota: (612) 664-5600

[Burnaby49]

A question for you US tax guys. Article says this;

Diane Kroupa held a position of public trust as a federal tax court judge and made rulings based on the very tax laws she broke. She broke that trust when she thought she was above the law and committed the same crimes as those who appeared before her in court over the past decade.

Is that correct, that the United States Tax Court handles criminal cases? The Canadian Tax Court, a federal court like your Tax Court, hears only civil tax disputes. Criminal tax evasion is the responsibility of the various provincial courts.

[jcolvin2]

A question for you US tax guys. Article says this;

Diane Kroupa held a position of public trust as a federal tax court judge and made rulings based on the very tax laws she broke. She broke that trust when she thought she was above the law and committed the same crimes as those who appeared before her in court over the past decade.

Is that correct, that the United States Tax Court handles criminal cases? The Canadian Tax Court, a federal court like your Tax Court, hears only civil tax disputes. Criminal tax evasion is the responsibility of the various provincial courts.

No. The Tax Court only handles civil cases. However, a significant fraction of the caseload consist of cases in which civil fraud is alleged (many follow criminal tax prosecutions or investigations). Fraud both keeps the statute of limitations open forever, and can result in a 75% penalty on top of the tax liability.

[Burnaby49]

A question for you US tax guys. Article says this;

Diane Kroupa held a position of public trust as a federal tax court judge and made rulings based on the very tax laws she broke. She broke that trust when she thought she was above the law and committed the same crimes as those who appeared before her in court over the past decade.

Is that correct, that the United States Tax Court handles criminal cases? The Canadian Tax Court, a federal court like your Tax Court, hears only civil tax disputes. Criminal tax evasion is the responsibility of the various provincial courts.

No. The Tax Court only handles civil cases. However, a significant fraction of the caseload consist of cases in which civil fraud is alleged (many follow criminal tax prosecutions or investigations). Fraud both keeps the statute of limitations open forever, and can result in a 75% penalty on top of the tax liability.

That part's the same here. If an individual is convicted of tax fraud they are reassessed by the CRA based on the evidence presented at their criminal trial. This is necessary because the criminal courts do not have the authority to order reassessments, they impose fines and jail sentences. Taxpayers who are reassessed as a result of a criminal conviction occasionally appeal the assessment at Tax Court. Given that they've been found guilty of tax evasion on exactly the same issue they obviously never win, but they try.

[jcolvin2]

Taxpayers who are reassessed as a result of a criminal conviction occasionally appeal the assessment at Tax Court. Given that they've been found guilty of tax evasion on exactly the same issue they obviously never win, but they try.

Likewise in the US; wins are few and far between. However, it is not impossible to prevail in Tax Court after a criminal conviction:

http://www.ustaxcourt.gov/USTCInOP/Opin ... x?ID=10737