FOR IMMEDIATE RELEASE|
TUESDAY, JULY 20, 2004
TDD (202) 514-1888
TAX CHEAT SENTENCED TO MORE THAN 12 YEARS IN PRISON
Defendant And His Co-Conspirators Used Sham Trusts And Bogus Corporations
To Hide Business Profits From I.R.S
WASHINGTON D.C. - Eileen J. O’Connor, Assistant Attorney General for the Tax Division, United States Department of Justice; Gregory A. White, United States Attorney for the Northern District of Ohio; and Nancy Jardini, Chief, IRS Criminal Investigation, announced today that at the federal courthouse in Akron, Ohio, United States District Judge John R. Adams sentenced Gary Harris to 151 months imprisonment, to be followed by 3 years supervised release and a $95,000 fine.
In March 2004, after a four-week trial the jury found defendants Harris, Michael Kotula and Tamara Schwentker-Harris guilty of conspiring to defraud the United States (18 U.S.C. § 371). In addition, the jury convicted Messrs. Harris and Kotula on three counts and one count of income tax evasion (26 U.S.C. §7201), respectively. On June 22, 2004, Judge Adams sentenced co-defendant Michael Kotula to 70 months imprisonment, to be followed by three years supervised release, a $100,000 fine, payment for the costs of prosecution, and $82,806.83 in restitution to the Internal Revenue Service. Mr. Kotula was taken into custody immediately. On the same date, Judge Adams also sentenced Tamara Schwentker Harris to 15 months imprisonment, two years supervised release, and payment of $17,054 as restitution to the Internal Revenue Service.
"Those who attempt to hide income from the IRS by moving it into bogus trusts or by using other fraudulent schemes need to know they risk criminal prosecution," said Assistant Attorney General Eileen J. O'Connor. "The long prison sentences imposed in this case are the result of the IRS and the Department of Justice working aggressively to investigate and prosecute tax fraud."
"The IRS aggressively investigates those who use abusive trust arrangements to hide the true ownership of assets and income. It is a matter of maintaining public confidence in the fairness of the tax laws," stated Nancy Jardini, Chief, IRS Criminal Investigation. "If individuals choose to participate in abusive trust schemes, they will be held accountable and sentenced to prison."
At trial, the evidence proved the defendants used a maze of trusts and corporations to try to hide approximately $18 million in income generated by various businesses they controlled, including historic Conneaut Lake Park in Crawford County, Pennsylvania. Between January 1, 1994, and July 8, 2003, they paid little or no taxes on the income earned. Nonetheless, Mr. Harris lived lavishly, acquired several homes, a jetway for his ranch in Conneaut, and an antique Mercedes sports car which he claimed was worth $250,000.
Mr. Harris has been in federal custody since his arrest in July 2003. He was convicted of tax evasion for tax years 1987, 1989, and 1990. In addition, between 1998 and 2002, when Mr. Harris was in federal prison after convictions for racketeering and income tax evasion, Mr. Kotula and Ms. Schwentker Harris kept Mr. Harris’s businesses running and continued to operate this illegal conspiracy.
Assistant Attorney General Eileen J. O’Connor and United States Attorney Gregory A. White thanked Tax Division Trial Attorney Robert J. Livermore and Antitrust Division Trial Attorney Brian Stack, who prosecuted the case. They also thanked the special agents of the Internal Revenue Service, whose assistance was essential to the successful investigation and prosecution of the case.
Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax