Appleton Resident Sentenced to 15 Months in Federal Prision for Tax Evasion
United States Attorney James L. Santelle announced that on August 8, 2012, Diane L. Baugh (age: 56) of Appleton was sentenced to 15 months in federal prison after pleading guilty to three counts of tax evasion based on her failure to report over $300,000 in income she received by using the internet to knowingly sell stolen merchandise. By failing to report the income, Baugh willfully avoided paying over $86,000 in taxes and actually received tax refunds to which she was not entitled.
The investigation determined that between January 2005 and April 2010, Baugh received over $605,000 by selling stolen scrapbooking merchandise, and that she willfully failed to report any of that income to the Internal Revenue Service. Baugh received the stolen merchandise from Virginia M. Akers (age: 67) of Indiana who had shoplifted it from Hobby Lobby department stores in several states and shipped it to Baugh in Appleton. Baugh advertised the merchandise on eBay and also used direct email marketing with foreign and domestic customers that she had cultivated on eBay over the years. Baugh’s on-line customers paid her for the merchandise and shipping costs using PayPal. Baugh then used PayPal and money wire services to pay Akers for her share.
Baugh sold the stolen merchandise for 25% of its true retail value of over $2.2 million. From the gross receipts of over $605,000, Baugh paid Akers over $257,000. After paying over $46,000 in shipping costs, Baugh’s net income was approximately $301,561. Baugh’s fraudulent tax returns also claimed that after deductions and credits, she had no taxable income and was therefore entitled to tax refunds. Baugh received those refunds for tax years 2005-2009.
The district court also ordered Baugh to serve three years on supervised release after her release from prison, to pay restitution of $2,232,000 to Hobby Lobby for the stolen merchandise, and to pay restitution of $86,032 to the Internal Revenue Service representing the amount of tax loss to the government.
On January 23, 2012, Virginia Akers was sentenced to 60 months in federal prison for conspiracy to commit mail and wire fraud relative to the stolen scrapbooking merchandise.
The case was investigated by the United States Postal Inspection Service, the Appleton Police Department, the Champaign (Illinois) Police Department, the Internal Revenue Service Criminal Investigation, Hobby Lobby’s Loss Prevention Department, and other state and local law enforcement agencies. The case was prosecuted by the Assistant United States Attorney Timothy Funnell.
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