News and Press Releases

local venture capitalist pleads guilty to tax charges

FOR IMMEDIATE RELEASE
August 26, 2013

St. Louis, MO – BURTON DOUGLAS MORRISS pled guilty to tax evasion charges associated with his evasion of taxes on millions of dollars of income he earned between 2006 and 2009.  According to his plea agreement, the tax liability Morriss attempted to evade in 2007 was $2,888,483.  The total tax due and owing by Morriss for all tax years is $5,559,386.

According to court documents, Morriss was a venture capitalist living in St. Louis County.  Morriss admitted that, through his work, he was versed in tax laws. As a venture capitalist, he would discuss tax consequences of buying and selling investments to sophisticated investors. Moreover, he had been dealing with advisers and lawyers regarding his personal taxes for many years before 2006.

For the tax year 2007, which is the tax evasion count to which he pleaded guilty, Morriss earned substantial income from his venture capital activities. In order to reduce his tax liability for that year, he claimed $18,160,613 in losses associated with a number of entities, including Morriss Holdings, MIC Aircraft, Tech Aircraft and MIC Real Estate. These entities were established as single member limited liability companies for Morriss' mother. Additionally, Mrs. Morriss had already claimed these passive losses for her own benefit in previous years.  In addition to these 2007 tax losses, Morriss admitted to evading millions more in taxes on income from his venture capital companies in subsequent tax years.

Morriss did not timely file tax returns for 2006, 2007, 2008 and 2009. On June 27,2011, Morriss filed the delinquent 2007 tax return that is the subject of the guilty plea, along with delinquent 2008 and 2009 tax returns.

Sybil A. Smith, the Special Agent in Charge of IRS-Criminal Investigation, stated, "To build faith in our nation's tax system, honest taxpayers need to be reassured that everyone is paying their fair share. IRS Criminal Investigation, together with the Department of Justice, will diligently investigate and prosecute those who knowingly violate our tax system for their own enrichment."

Morriss, Creve Coeur, MO, pled guilty to one felony count of tax evasion before United States District Judge Rodney Sippel.  Sentencing has been set for November 22, 2013. 

This charge carries a maximum penalty of five years in prison and/or fines up to $100,000.  Restitution is mandatory.  In determining the actual sentences, a Judge is required to consider the U.S. Sentencing Guidelines, which provide recommended sentencing ranges.

Morriss' plea comes shortly after a judgment of permanent injunction was ordered against him in the case of Securities and Exchange Commission v. Burton Douglas Morriss in the Eastern District of Missouri.  On August 13, 2013, United States District Judge Carol E. Jackson ordered that Morriss, among other things, is prohibited from acting as an officer or director of certain companies issuing securities.  The SEC matter was filed in 2012 in the wake of the collapse of the Acartha Group, LLC and other venture capital companies run by Morriss.  The SEC complaint alleged that Morriss had fraudulently transferred millions of investor dollars to himself for personal use.  In addition to the director/officer bar, the SEC will ask the Court to order disgorgement of ill-gotten gains and civil penalties at a future date. 

In addition to the SEC, this case was investigated by Internal Revenue Service Criminal Investigation, the Federal Bureau of Investigation and the United States Postal Inspection Service.  Assistant United States Attorney Tom Albus is handling the case for the U.S. Attorney’s Office. 

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