News Release
U.S. Department of Justice
United States Attorney
District of Rhode Island
June 20, 2008
Machine shop owners are charged with tax fraud
A federal grand jury in Providence has charged two Woonsocket-based machine shop owners, and the wife of one of them, with a tax fraud conspiracy in which they allegedly used a series of ruses to conceal their income and avoid paying taxes. One of the defendants allegedly sent letters to the IRS claiming that he was not required to pay taxes.
United States Attorney Robert Clark Corrente announced a seven-count indictment, which the grand jury returned June 18 in U.S. District Court, Providence. The indictment was placed under seal until the arrest of the defendants yesterday.
Charged are: Bruce Lapierre, 47, of Pascoag, and Albert Martin, 58, of Woonsocket, who together operate Classic Machine in Woonsocket, and Lorraine Martin, 59, who is married to Albert Martin. They appeared yesterday before U.S. Magistrate Judge Lincoln D. Almond. Lapierre and Lorraine Martin pleaded not guilty, and Albert Martin’s arraignment was continued to June 26 after he claimed not to understand the charges. All three were released on bond.
According to the indictment, from 1997 to 2004 Lapierre and Albert Martin engaged in an elaborate scheme to conceal from the IRS income that they earned through Classic Machine, and thus avoid paying taxes on that income. Rather than open business accounts for depositing business receipts and income, they allegedly used Lorraine Martin’s personal account to conceal business receipts, as well as an anonymous “private” banking service designed to conceal income from the IRS.
The indictment also alleges that the defendants, in order to further conceal their assets and income from the IRS, used multiple business names, such as Banner Technologies, Circle Machine, Preferred Enterprises, and Royal Enterprises, to conduct the machine shop business. The defendants also made extensive use of cash and money orders. For example, they allegedly cashed checks under $10,000 in order to avoid federal Currency Transaction Reports, which are required for currency transactions of $10,000 or more.
According to the indictment, Bruce Lapierre tried to obstruct an IRS investigation of the machine shop’s income by “renaming business assets, sending false and frivolous letters to the IRS claiming he was not required to file tax returns or pay taxes,” and by directing a financial institution not to comply with an IRS summons for records.
The indictment charges the three defendants with one count of conspiracy to defraud the United States. It also charges each separately with two counts of tax evasion for the tax years 2002 and 2003. An indictment is merely an allegation and a defendant is presumed innocent unless and until proven guilty. If the defendants are convicted, each count of the indictment has a maximum penalty of five years in prison and a $250,000 fine.
"As this indictment shows, under the Tax Division's National Tax Defier Initiative, the Department of Justice will be seeking to vigorously prosecute those who engage in tax defier conduct, which subverts the nation's ability to fairly and legitimately assess and collect the taxes owed by every taxpayer," said Nathan J. Hochman, Assistant Attorney General of the Justice Department's Tax Division.
“Fulfilling individual tax obligations is a legal requirement and IRS will pursue those who intentionally conceal income and evade taxes," said Eileen Mayer, Chief, IRS Criminal
Investigation. "The investigation of individuals who willfully evade their taxpaying responsibility is a vital element in maintaining public confidence in our tax system."
The Internal Revenue Service, Criminal Investigation Division conducted the investigation. Trial Attorneys John Kane and Jorge Almonte with the U.S. Department of Justice, Tax Division, are prosecuting the case.