Contact:
Donald A. Davis
Assistant United States Attorney
(616) 456-2404

FOR IMMEDIATE RELEASE

Grand Rapids, Michigan – September 27, 2004 – United States Attorney Margaret M. Chiara and Sandra L. Carter, Acting Special Agent in Charge of the Internal Revenue Service Criminal Investigation Division, announce that Andrew Stuart Ouwenga, age 62, and Karen Ann Ouwenga, age 59, of Howard City, Michigan, were sentenced before United States District Judge David W. McKeague, in Lansing, Michigan, following a May 26, 2004, jury conviction on several tax-related felony offenses. Mr. Ouwenga received 60 months imprisonment and Mrs. Ouwenga received 51 months imprisonment, which are each followed by two years’ supervised release. They must also cooperate with the Internal Revenue Service, file back tax returns and make arrangements to pay all taxes due and owing, along with any interest and penalties. They must also pay court cost of $5,016.80.

Evidence at trial demonstrated that Andrew and Karen Ouwenga owned and operated Labakk Studio, a photography business, in Grand Rapids, Michigan, from 1994 through 2003. Andrew Ouwenga was the photographer and Karen Ouwenga managed the accounts payable. The Ouwengas also owned and operated Tamarack Pines Estates, a mobile park, located in Montcalm County, Michigan. The Ouwengas’ accountant prepared their 1994 federal income tax return, which claimed more than $75,000 in income, however, the defendants instead filed a frivolous tax return claiming they had no income and requested a tax refund of their 1994 withholdings of more than $10,000. Andrew Ouwenga informed his accountant that he would not file tax returns or pay income taxes because "the Sixteenth Amendment was never ratified."
Despite gross deposits of over $6.3 million and gross business receipts of $1.7 million into their bank accounts, the Ouwengas failed to file their tax returns. From 1993 through 1999, the Ouwengas created at least nine sham trusts, which enabled them to conduct their personal and business affairs while evading their income tax obligation.

The Defendants were first arrested on March 7, 2003, and jailed for civil contempt of court for their failure to comply with grand jury subpoenas and court orders. Their continued failure to comply with subpoenas and court orders resulted in charges of criminal contempt.

The Ouwengas were convicted of conspiracy to defraud the United States by impeding and obstructing the lawful functions of the Internal Revenue Service, evading their 1997 federal income tax, and two counts of willfully and unlawfully disobeying a grand jury subpoena. In addition, Andrew Ouwenga was also found guilty on three counts of tax evasion involving his 1998, 1999, and 2000 tax years. Following their convictions, the Court ordered that they remain in federal custody until sentencing.

Ms. Carter stated, "The courts have consistently and unanimously held that it is absolutely and completely wrong to attempt these frivolous tax arguments and drop out of the tax system. Any individual who thinks otherwise is making a grave error in judgment, which could result in a significant prison sentence."

Ms. Chiara commended the efforts of the IRS agents who investigated the case. Assistant United States Attorney Donald A. Davis prosecuted this case on behalf of the United States.