WASHINGTON – Michael John Smith, a former commemorative firearms dealer, was sentenced to 36 months’ imprisonment today in Cheyenne, Wyo., on federal tax and fraud charges, the Justice Department and Internal Revenue Service (IRS) announced. Smith, formerly of Cheyenne and currently a resident of Mona, Utah, was convicted by a jury on March 5, 2008, of one count of obstructing the IRS, one count of tax evasion, and three counts of submitting fictitious obligations to the United States and the state of Wyoming. He was also convicted of two counts of making false statements relating to a bankruptcy petition.
In addition to serving 36 months in prison, U.S. District Judge Clarence A. Brimmer also ordered Smith to serve three years of supervised release and to pay restitution to the United States and to the state of Wyoming.
According to the evidence presented to the jury, Smith used checks drawn on a closed bank account and fictitious financial instruments to try to pay more than half a million dollars he owed to the IRS from the previous decade. Smith also attempted to pay his Wyoming state sales tax liability with a similar fictitious “bill of exchange.”
After the U.S. District Court for Wyoming entered a decree of foreclosure against Smith’s residence in 2004 to satisfy a federal tax lien, Smith harassed federal officials and employees, including IRS employees, federal judges for the District of Wyoming, and the U.S. Attorney for the District of Wyoming, by threatening to file liens against them and have them arrested if they did not pay him hundreds of millions of dollars.
Around the same time, Smith filed similar documents with Wyoming’s Secretary of State falsely claiming that the federal officials owed him at least $767 million and up to $2 billion and that their property was encumbered by security interests in favor of him. Smith’s convictions for making false statements in a bankruptcy petition were based on his failure to disclose his interest in real property in Mona – a home he purchased and used as his personal residence but titled in the name of a nominee.
“Once more, the courts have demonstrated that activities such as those committed by Smith are totally illegal. Individuals who buy into schemes and follow financial formulas in the hopes that they can evade their tax-paying responsibility should learn from this sentencing that the cost of this activity is steep,” said Eileen Mayer, Chief IRS Criminal Investigation.
“This serves as one more example that tax defier conduct, such as the actions taken by Smith, may result in severe repercussions, including imprisonment, restitution orders and fines,” said Nathan J. Hochman, Assistant Attorney General of the Justice Department’s Tax Division.
The case was prosecuted by Justice Department Tax Division trial attorneys Katie Bagley and Jay Nanavati and investigated by the IRS Criminal Investigation Division.