United States Attorney David Capp
Northern District of Indiana
M01-204 S. Main Street
South Bend, Indiana 46601
Hammond South Bend Fort
Hammond South Bend Fort Wayne
FOR IMMEDIATE RELEASE CONTACT: Mary L. Hatton
May 17, 2012 PHONE: (219) 937-5500
www.usdoj.gov/usao/inn/ Fax: (219) 852-2770
ELKHART MAN SENTENCED IN TAX FRAUD CASE
South Bend, Indiana -- United States Attorney David Capp announced that Kenneth A. Gaipa, 43, of Elkhart, Indiana, was sentenced by Judge Robert L. Miller, Jr. to 24 months imprisonment and two years of supervised release after pleading guilty to the felony offenses of tax evasion, social security fraud and bankruptcy fraud. Gaipa was also ordered to pay a $30,000 fine, $500 in special assessments and $315,196.64 in additional restitution not yet paid.
According to the Plea Agreement filed in this case, Gaipa admitted that he willfully evaded federal income taxes for the years 2008 through 2010 by using business accounts for Kenneth G Rare Coins and Estate Jewelry to pay for personal expenses and having all of these expenses reported as if they were business expenses. He submitted false records to his tax return preparer knowing that the records would significantly under report his income to the Internal Revenue Service in order to minimize taxes due and allow him to continue to receive social security disability payments to which he was not entitled.
Gaipa admitted that he made false statements to the Social Security Administration in order to continue to receive benefits to which he was not entitled. Gaipa submitted a “Work Activity Report” in June 2011 that indicated he had not worked since February 2006, and that he had no income when in fact he had substantial income as the owner of Kenneth G Rare Coins and Estate Jewelry.
Gaipa further admitted that he committed bankruptcy fraud from November 2008 through February 2009 by signing a false petition for bankruptcy and misrepresenting his true financial affairs and assets to the U.S. Trustee and his creditors, allowing his debts to be discharged in the bankruptcy proceedings. He falsely underreported his income and stated that he had only lent his name to the Kenneth G Rare Coins and Estate Jewelry business, concealing that he was the true owner and had significant assets and earned income from the business.
“Concealing assets in a bankruptcy proceeding is a crime that threatens the integrity of the bankruptcy process and public confidence in that process. We are grateful to all of our law enforcement partners in this case, and in particular to U.S. Attorney David Capp for his commitment to pursuing those who commit bankruptcy fraud,” stated Nancy J. Gargula, United States Trustee for Indiana and Central and Southern Illinois (Region 10). Region 10 of the U.S. Trustee Program is headquartered in Indianapolis, with additional offices in South Bend, Ind., and Peoria, Ill. The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws.
This case was the result of an investigation by the Internal Revenue Service, the Social Security Administration, and the United States Trustee’s Office – Northern District of Indiana. This case was prosecuted by Assistant United States Attorney Donald J. Schmid.