FOR IMMEDIATE RELEASE|
THURSDAY, JUNE 2, 2005
TDD (202) 514-1888
SEVIER COUNTY REAL ESTATE DEVELOPERS INDICTED FOR TAX FRAUD
WASHINGTON, D.C.-Eileen J. OíConnor, Assistant Attorney General for the Justice Departmentís Tax Division, and Cleve Daniels, Special Agent in Charge, Internal Revenue Service (IRS), Criminal Investigation, today announced the indictment of Arnold R. Schmid and Kathleen Schmid, of Sevier County, Tennessee, for committing tax fraud. The Schmids were each charged with one count of conspiracy to defraud the United States and three counts of failure to file tax returns with the IRS. If convicted, Arnold and Kathleen Schmid each face up to eight years in prison and fines in excess of $500,000.
According to the indictment, the Schmids were engaged in the acquisition, development, rental, management, and sale of real estate in Sevier County. They owned and operated a cabin rental management business named Alpine Mountain Chalets. They also developed an area of land located on Evans Chapel Road named the Alpine Ridge Subdivision.
The government alleges that the Schmids conspired to defraud the United States by obstructing the lawful functions of the Internal Revenue Service in the collection of their federal income taxes. The Schmids allegedly did this by using multiple nominees and nominee bank accounts to conceal their assets and income from the IRS. The nominees and nominee accounts were allegedly designed to create the appearance that the Schmids had relinquished ownership of and control over their businesses. In fact, the Schmids still had control over these businesses and the approximately $1.2 million of income earned through them. They allegedly attempted to conceal this income from the government in order to evade payment of the taxes they owed.
This investigation was conducted by IRS Criminal Investigation. Department of Justice Tax Division trial attorneys Jeffrey A. Neiman and Jay Nanavati will represent the government at trial.
The charges contained in the indictment are only allegations. In the American justice system, a person is presumed innocent unless and until he or she is proven guilty in a court of law.