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Co-conspirators who ran store in johnstown arrested for tax evasion and conspiracy to defraud the iRS

FOR IMMEDIATE RELEASE
July 15, 2014

 

DENVER –Alan Timothy Hershey, age 49, of Gilcrest, Colorado, and Renee F. Molinar, age 46, of Johnstown, Colorado, were arrested yesterday without incident for tax evasion and conspiracy to defraud the Internal Revenue Service, United States Attorney John Walsh and IRS Criminal Investigation Special Agent in Charge Stephen Boyd announced.  Hershey and Molinar appeared in court for their initial appearance before U.S. Magistrate Judge Boyd N. Boland yesterday afternoon, where they were advised of their rights and the charges pending against them.  They were indicted by a federal grand jury in Denver on July 3, 2014.  The indictment remained sealed pending their arrests.
 
According to the facts contained in the Indictment, from March 2001 through April 2012, Alan Timothy Hershey and Renee Molinar, conspired together to defraud the Internal Revenue Service.  Johnstown Liquor is a retail liquor store located in Johnstown, Colorado.  In March of 2001 Hershey transferred the store into Molinar’s name. They concealed from the IRS the fact that Molinar, who for much of the period of the conspiracy lived with Hershey, was the owner of Johnstown Liquor in name only, and that Hershey continued to control the operation of the business as its true owner.

Hershey directed Molinar and others as to how to operate the business, usually by speaking to them at his home or by speaking to them by phone during business hours.  Hershey dealt as much as possible in cash, and minimized his own use of bank accounts. Molinar opened bank accounts in the name of Johnstown Liquor over which she and individuals other than Hershey had signature authority.  She also obtained a liquor license to operate Johnstown Liquor in her name.

They used a point of sale record-keeping system which was connected to the store’s cash registers and accurately recorded the business’s cash, check, and credit card receipts. It also maintained an accurate record of the items sold, the cost of each item sold, and the price for which it was sold.  An unindicted co-conspirator, typically reconciled the sales receipts to the daily point of sale close-out reports, then placed the cash and checks in a safe in the store each night.  At Hershey’s direction, Molinar then removed most of the cash receipts before preparing the deposit slips and causing the bank deposits to be made. She gave that cash to Hershey.  To conceal the existence of the cash receipts that had been removed, they used a second set of books. 

They also used the check-cashing business operated by Johnstown Liquor to conceal the true amount of the business’s cash receipts.  Hershey filed no federal income tax returns for the entire period of the conspiracy and made no payments of income taxes to the IRS.  Molinar sent payments to the IRS for each tax year from 2001 through 2010, but filed no returns with those payments to explain the amounts she sent. The amounts she paid were roughly consistent with what she may have earned as an employee at Johnstown Liquor, but not consistent with her income as sole proprietor of the business. In 2008, after she had been confronted by an IRS revenue agent about her failure to file federal income tax returns, she filed returns for 2005 and 2006. On these, she held herself out as the true owner of Johnstown Liquor and substantially understated the gross receipts of the business.

Johnstown Liquor was also required to withhold employment taxes from each employee’s wages and submit those withholdings, along with an Employer’s Quarterly Federal Tax Return (Form 941), to the IRS along with an annual Employer’s Annual Federal Unemployment Tax Return (Form 940).  Molinar paid certain employees in cash at the direction of Hershey.  No taxes were withheld from the wages paid in cash.  To ensure the IRS would not discover employees paid in cash, Hershey instructed the employees who were paid in cash not to file tax returns.

To conceal Hershey’s control of Johnstown Liquor, its cash receipts, his income, and his assets from the IRS, he arranged for residential properties and businesses to be purchased in the names of nominees.

Renee Molinar was charged with one count of conspiracy to defraud the United States, which carries a penalty of not more than 5 years in federal prison and a fine of up to $250,000.

Alan Timothy Hershey was charged with one count of conspiracy to defraud the United States, which carries a penalty of not more than 5 years in federal prison and a fine of up to $250,000, and 10 counts of tax evasion, which carries a penalty of not more than 5 years in federal prison, and a fine of up to $100,000 per count. 

This case was investigated by IRS-Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Linda Kaufman. 

The charges contained in the indictment are allegations, and the defendants are presumed innocent until proven guilty 

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