News and Press Releases

Salem Man Sentenced for Tax Fraud and failure to Appear

FOR IMMEDIATE RELEASE
July 27, 2011
Contact: Mark E. Salter
Assistant United States Attorney
605-357-2360

US Attorney Brendan V. Johnson announced that a Salem, SD man convicted of tax fraud, passing fictitious United States Treasury bonds, and failure to appear was sentenced on July 26, 2011, by US District Court Judge Lawrence L. Piersol. Thomas R. Kelley, age 54, was sentenced to a total of 70 months in prison to be followed by 5 years of supervised release. After a jury found him guilty of 22 counts of tax fraud and other financial crimes, Kelley failed to appear at his scheduled August 23, 2010 sentencing hearing, which led authorities on a four-month, multi-state search for him. He was then charged and convicted by a jury of willful failure to appear. Throughout the two jury trials, Kelley claimed to be a “sovereign citizen,” arguing unsuccessfully that, therefore, certain federal laws do not apply to him.

“The crimes in this case began with Mr. Kelley’s efforts to evade taxes and to defraud local businesses and banks, and he ultimately became a fugitive from justice,” said United States Attorney Brendan V. Johnson. “The search for him was a multi-agency law enforcement effort. His capture and this significant sentence will hopefully send the message that you can’t decide which laws apply to you.”

"Today's sentencing of Thomas Kelley is a direct result of the excellent partnership IRS and the U.S. Attorney’s office has in combating violations of Federal law," said Kelly R. Jackson, Special Agent in Charge IRS-Criminal Investigation, St. Paul Field Office. "This sentence should serve as a deterrent to those who might contemplate similar fraudulent actions."
Kelley was indicted for filing a false income tax return, impeding the Internal Revenue Service, 2 counts of tax evasion, 3 counts of willful failure to file tax returns, and 16 counts of uttering fictitious obligations (private discharging and indemnity bonds, private offset bonds, and bonded promissory notes) by a federal grand jury on October 6, 2009. He was convicted of all 22 counts presented to the jury during a three-day jury trial which began on May 4, 2010.

On the charges stemming from those May 4, 2010 convictions, Kelley was sentenced to 46 months in prison to be followed by 5 years of supervised release. He was also ordered to make restitution to the Internal Revenue Service in the amount of $96,710.06, and pay the costs of prosecution in the amount of $49,749.

Kelley was also indicted for failure to appear on September 8, 2010, after he failed to appear for sentencing on August 23, 2010, for his tax case. He was ultimately arrested in December 2010. He was convicted of willful failure to appear following an April 6, 2011 jury trial. Kelley was sentenced to 24 months in prison (consecutive to the 46 months in the tax case) to be followed by 2 years of supervised release (concurrent with the 5 years in the tax case).

The cases were prosecuted by Assistant United States Attorney Kevin Koliner. The investigation of the tax case was conducted by the Internal Revenue Service, Criminal Investigation Division. The investigation of the failure to appear case was conducted by the United States Marshals Service, the Internal Revenue Service, Criminal Investigation Division, the Federal Bureau of Investigation, Minnehaha County Sheriff’s Office, and the South Dakota Division of Criminal Investigation.

This case was investigated by the Internal Revenue Service - Office of Criminal Investigations. Assistant US Attorney Kevin Koliner prosecuted the case.

Kelley was immediately turned over to the custody of the US Marshal.

 

 

 

 

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