United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

Fort Worth Chiropractor Pleads Guilty to Tax Evasion -
Faces 5 Years Imprisonment

United States Attorney Richard H. Stephens announced today that John F. Schmidt, age 37, of Fort Worth, Texas, pled guilty today in federal court to tax evasion, in violation of Title 26, United States Code, Section 7201. He faces a maximum statutory imprisonment of five years and a $250,000 fine. He is scheduled to be sentenced by the Honorable United States District Judge John H. McBryde on July 19, 2002.

Schmidt, a doctor of chiropractic medicine, practices in Fort Worth at the Montgomery Physical Medicine and Rehabilitation clinic. Schmidt admitted that he willfully evaded paying 1999 federal income taxes he and his wife owed by filing a false and fraudulent joint Income Tax Return Form 1040. That form stated that their joint taxable income for 1999 was $405,406 and the amount of tax due was $153,157. Schmidt well knew however, that their true income for 1999 was $586,694 and the correct tax due was $203,917.

To purposely evade a substantial income tax, John F. Schmidt filed his 1999 income tax return based on false deductions and false business expenses and failed to report income from unlawful activity. Schmidt admitted that in 1999 he received payments of $78,684 from various sources based on false billings for medical services, including false work hardening services, that he intentionally did not report on his tax return. This taxable income from this unlawful activity should have been reported and Schmidt's attempt to evade his tax liabilities to the IRS resulted in an additional tax liability of over $10,000 for 1999.

Schmidt also acknowledged that he claimed false deductions of $6760 by using personal expenses, such as vacations, as business deductions. He also admitted that he created false business payroll expenses of $95,844 by creating and inflating payroll expenses.

Schmidt's fraudulent activity was not limited to 1999. He acknowledged that in 1998 he received payments of approximately $59,230 from various sources based on false billings for medical services that he did not include on his 1998 joint return. He also admitted that for 1998 he took approximately $17,142 in false deductions, similar to those he took in 1999. Schmidt admitted that he failed to pay approximately $72,144 in federal income taxes for tax years 1998 and 1999.

"As April 15th is just days away, I remind everyone that tax evasion is a serious crime," said U.S. Attorney Richard H. Stephens. "Cases where individuals failed to file tax returns, or filed false tax returns, will be vigorously investigated and prosecuted by this office," Stephens said.

This case demonstrates the government's continuing efforts to prosecute professionals, particularly doctors, lawyers, engineers and others who have failed to file tax returns or who have substantially under-reported their income on their tax returns. The joint investigation was conducted by the Federal Bureau of Investigation, Internal Revenue Service - Criminal Investigation, and the Texas Worker's Compensation Commission. Assistant United States Attorney Ron Eddins is prosecuting the case.

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