CONTACT: GINA BALAYA - (313) 226-9758

                    STEPHEN MOORE -IRS (313) 628-3307
 

FOR IMMEDIATE RELEASE:
 

    United States Attorney Jeffrey G. Collins and Special Agent in Charge Mark Kroczynski, Internal Revenue Service Criminal Investigation, announced that Dr. Timothy Kosinski, of Novi, Michigan, and his wife Barbara, were indicted on one count of conspiring with Melvin Phillips, of Detroit, Michigan, to impede, impair, obstruct and defeat the lawful functions of the Internal Revenue Service and with multiple counts of structuring transactions to evade reporting requirements. Dr. Kosinski was also indicted on five counts of subscribing false personal and corporate tax returns.

    The indictment alleges that Dr. Kosinski is a licensed dentist, with his principal place of business located in Bingham Farms, Michigan and is the president of T.J. Construction. T.J. Construction was involved with various Thyssen, Inc., construction projects, including the construction of steel processing plants in Detroit, Michigan and Richburg, South Carolina. As of October 1, 1998, Thyssen, Inc., headquartered in Detroit, Michigan, was a subsidiary of Thyssen Krupp AG, a German corporation. Dr. Kosinski hired Mr. Phillips to work on the construction projects and supervise various construction workers.

    The indictment further alleges that from 1995 through 1998, Thyssen, Inc. paid T.J. Construction over $41.8 million dollars. During this time period, Dr. Kosinski, his wife Barbara, and Mr. Phillips withdrew over $7.6 million in U.S. currency from bank accounts maintained in their names or under their control. They made cash payments to individuals associated with the construction projects for the purpose of impeding and impairing the IRS from ascertaining and collecting federal income taxes. Dr. Kosinski, Mrs. Kosinski, and Mr. Phillips concealed the existence of the cash payroll by cashing hundreds of checks at banks in amounts below $10,000 for the purpose of preventing the banks from filing currency transaction reports with the IRS. They also tried to conceal the existence of the cash payroll by dealing extensively in cash, not maintaining records, and filing false corporate and personal income tax returns with the IRS.

    Mr. Collins stated, "On June 5, 2002, Mr. Phillips pleaded guilty before United States District Court Judge Arthur J. Tarnow to one count of conspiring to impede, impair, obstruct and defeat the lawful functions of the Internal Revenue Service, including ascertaining and collecting federal employment taxes, by concealing the payment of millions of dollars "off-the-books" cash wages to construction workers. Mr. Phillips also pleaded guilty to one count of tax evasion. According to the plea agreement filed with the court, the tax loss to the government exceeds $950,000. Mr. Phillips will be sentenced September 17, 2002, at 2:00 pm."

    Mr. Collins stated, "Conspiring to impede, impair, obstruct and defeat the lawful functions of the Internal Revenue Service is a violation of Title 18, United States Code, Section 371. Structuring transactions to evade reporting requirements is a violation of Title 31, United States Code, Section 5324 (a) (3). Willfully evading income taxes is a violation of Title 26, United States Code, Section 7201. Each count of conviction for these violations carries a maximum penalty of five years imprisonment and a $250,000 fine. Willfully making and subscribing a false income tax return under penalties of perjury is a violation of Title 26, United States Code, Section 7206 (1). Each count of conviction carries a maximum penalty of three years imprisonment and a $250,000 fine."
 

    Mr. Kroczynski stated, "IRS Criminal Investigation realizes the detrimental consequences that this type of crime has with the loss of tax revenue to the United States government and the loss of future social security or Medicare benefits for the employees. Employment tax crimes are one of the growing areas of concern for IRS Criminal Investigation and we will continue to be aggressive in identifying and investigating these types of crimes that only enrich some greedy individuals, at the expense of their employees and the taxpayers who are paying their fair share."

    An indictment is only a charge and not evidence of guilt. Dr. Kosinski and Mrs. Kosinski are entitled to a fair trial in which it will be the government's burden to prove guilt beyond a reasonable doubt.

    Mr. Collins commended the special agents of the Internal Revenue Service Criminal Investigation for their work in this investigation. Assistant United States Attorney Richard L. Delonis and Trial Attorney John Sullivan, Department of Justice, Tax Division, Washington D.C., are prosecuting the case.