Santa fe couple pleads guilty to conspiracy to defraud federal government
United States Attorney Kenneth J. Gonzales announced that, this afternoon, Carolynne Tilga, 50, and her husband Michael Chandler, 51, residents of Santa Fe, New Mexico, pleaded guilty to conspiring to defraud the United States by impeding the lawful functions of the Internal Revenue Service (IRS) before United States Magistrate Judge W. Daniel Schneider. Tilga and Chandler each pleaded guilty to Count 1 of a ten-count indictment charging them and their codefendant Helen Geer, also of Santa Fe, under plea agreements with the United States Attorney's Office. At sentencing, which has yet to be scheduled, Tilga and Chandler each face up to five years imprisonment. Under the terms of her plea agreement, by her sentencing date, Tilga must file amended tax returns for tax years 1998 through 2004 and pay a minimum of $1,735,025.00 to the United States to cover her outstanding tax debt for tax years 1998 through 2004. The agreement also requires that Tilga file amended tax returns for tax years 2005 through 2009, tax years outside of the indictment period, and pay any taxes due and owing on the amended returns.
The indictment in this case, which was filed on April 9, 2009, charges Tilga, Chandler and Geer as follows: Count 1, charging the three defendants with conspiracy to defraud the United States; Counts 2 through 7, charging Tilga with income tax evasion; and Counts 8 through 10, charging Geer with filing false tax returns. It alleges that, from 1998 through 2006, Tilga owned and controlled various businesses involved in adult entertainment internet services; that Chandler worked with Tilga in several of Tilga’s businesses during this period; and that Tilga employed Geer as an in-house accountant for her businesses from 2002 through 2004. The indictment further alleges that, during the years 1998 through 2006, Tilga and Chandler took steps unlawfully to conceal from the IRS a significant amount of taxable revenue generated by Tilga’s adult entertainment internet businesses, and that Geer aided the couple’s unlawful conduct from 2002 through 2004.
According to the indictment, Tilga and Chandler purchased numerous off-shore entities designed and used to conceal Tilga’s income and assets from the IRS. Tilga and Chandler allegedly hid revenue generated by Tilga’s adult entertainment internet businesses by using these off-shore entities; they did not report the revenue to the IRS; and they filed false tax returns with the IRS. Tilga and Chandler then used the money in the off-shore entities to purchase real estate and vehicles for their own use and enjoyment, including, but not limited to, multi-million dollar residences in Santa Fe, New Mexico and Kilauea, Hawaii; a residence and other real estate in Taos, New Mexico; real estate in Telluride and Mount Crested Butte, Colorado; and a Lexus and a Mercedes Benz.
In her plea agreement, Tilga admitted that, since the late 1990s, she has been a minority owner of certain Canadian internet businesses (Canadian Businesses) that provide computer billing services to entrepreneurs who market on-line pornographic materials to adults. Tilga also admitted that the Canadian Businesses generated substantial revenues between 1999 and 2006 and she directed her share of the revenues to the off-shore entities identified in the indictment. Tilga did not report the revenue generated by the Canadian Businesses or pay taxes on that revenue. Instead, Tilga used the revenue to purchase real estate properties, to renovate real estate properties she purchased, and to purchase vehicles, including the real estate and vehicles identified in the indictment. Tilga admitted that, as a result of her unlawful conduct, she owes, and will pay by her sentencing date, taxes in an aggregate amount of $1,735,025.00 to the IRS as follows:
- Tax Year 1998 – at least $23,200.00
- Tax Year 1999 – at least $554,493.00
- Tax Year 2000 – at least $194,175.00
- Tax Year 2001 – at least $69,800.00
- Tax Year 2002 – at least $823,536.00
- Tax Year 2003 – at least $69,821.00
In his plea agreement, Chandler admitted that, beginning in 1998 or 1999, he agreed to assist Tilga in moving money from off-shore trusts to purchase property in the United States, and that he knew that the off-shore trusts were used to evade their tax obligations.
Co-defendant Geer has entered a not guilty plea to the indictment and is pending trial. An indictment is merely an accusation, and a defendant is presumed innocent unless proven guilty.
The case was investigated by the IRS, and is being prosecuted by Assistant United States Attorney Jonathon M. Gerson and Trial Attorney Joseph M. Giannullo, U.S. Department of Justice, Tax Division