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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Virginia

FOR IMMEDIATE RELEASE
Tuesday, September 13, 2011

Halifax Man Pleads Guilty To Failing To Pay Income Taxes

Thomas Keith McDonald Faces Possible Prison Term

DANVILLE, VIRGINIA -- A former South Boston, Va. pharmacist who was indicted in April on charges he violated Federal tax law, pled guilty this morning in the United States District Court for the Western District of Virginia in Danville.

Thomas Keith McDonald, 54, of Halifax, Va., was charged in April with three counts of tax evasion and one count of obstructing the IRS. This morning in U.S. District Court, McDonald pled guilty to one count of tax evasion for the calendar year 2005. The maximum penalty faced by the defendant at sentencing is a maximum term of imprisonment of up to five years and/or a fine of up to $250,000.

“It is the duty of each and every American to pay our fair share of taxes,” United States Attorney Timothy J. Heaphy said today. “Mr. McDonald failed to fulfill that duty by filing false returns and attempting to disguise his assets. When individuals attempt to avoid paying their taxes, this office will pursue them vigorously.”

McDonald admitted this morning that from at least 2001 he gave his employer a “Withholding Exemption Certificate/ Certificate of Citizenship” in lieu of a W-4 form and a letter demanding that state and federal income taxes no longer be withheld from his paychecks due to the “illegality” of such withholdings. The employer complied with the defendant’s request and withheld only small amounts from McDonald’s earnings. After being contacted by agents from the Internal Revenue Service, the employer began to deduct Federal withholdings from McDonald’s paycheck.

McDonald also acknowledged today that he did not file tax returns with the IRS from 2001 until at least 2007. However, for the 2004 calendar year he did file a bogus “Zero Return,” with zeroes listed in all lines relevant to assess and compute tax liability.

In addition, McDonald admitted to setting-up limited liability corporations in the State of New Mexico, “Indiana Pastures,” “South Bay Services,” “Clear Mountain Waters” and “Prescription Savings Network” in order to disguise and conceal assets, net worth and financial transactions.

In 2008, McDonald submitted a “Non-Negotiable International Bill of Exchange” and “Chargeback Order” in the amount of $100,000,000,000 to the United States Treasury in lieu of paying his back taxes. In March of 2009, McDonald returned to the Internal Revenue Service collection notices related to his 1998 through 2003 tax liabilities. Included with the notices was a copy of a previously submitted “Registered Bonded Promissory Note” in the amount of $10,000,000.

The investigation of the case was conducted by the Internal Revenue Service Criminal Investigations Division. Assistant United States Attorney C. Patrick Hogeboom III will prosecute the case for the United States and has been assisted by law clerk Travis Miller.

Updated April 14, 2015