Man Pleads Guilty To Tax Evasion For Funds From Krzyzaniak Investment Scam
MINNEAPOLIS—Yesterday in federal court, a Twin Cities’ man pleaded guilty to failing to file taxes, knowing that at least a portion of the income subject to tax had been obtained through investment scams. John Marc Mulcahey appeared before United States District Court Chief Judge Michael J. Davis and pleaded guilty to two counts of failure to file a tax return. Mulcahey was charged on May 10, 2012.
In his plea agreement, Mulcahey admitted that for tax years 2008 and 2009, he failed to file income tax returns with the Internal Revenue Service (“IRS”). For 2008 and 2009, Mulcahey owed approximately $9,779 in unpaid taxes. For those years, at least part of Mulcahey’s income was obtained from investment scams orchestrated by Michael Joseph Krzyzaniak that bilked investors out of more than $20 million. In February of 2012, Krzyzaniak, also known as Michael Joseph Crosby, was sentenced to 151 months in prison on one count of wire fraud and one count of income tax evasion in connection to those scams, which lured people into investing money in ventures never completed, including a golf resort in California, alternative energy projects in Colorado, and a NASCAR-type race track in Elko, Minnesota, among others projects.
Mulcahey personally benefited from the scams. Although he failed to pay an estimated $9,779 in federal taxes owed for 2008 and 2009 combined, when his income included proceeds from that illegal activity. In addition, Mulcahey admitted he was responsible for failing to pay $34,997.20 in federal income taxes owed for 2005 through 2007.
For his crimes, Mulcahey faces a potential maximum penalty of one year in prison on each count. Judge Davis will determine his sentence at a future hearing. This case is the result of an investigation by the IRS-Criminal Investigation Division, the Federal Bureau of Investigation, and the U.S. Postal Inspection Service. It is being prosecuted by Assistant U.S. Attorney Christian S. Wilton.
Per U.S. Department of Justice policy, the U.S. Attorney’s Office is not allowed to provide the age and city of residence for defendants charged in criminal tax cases.