D O J Seal
U.S. Department of Justice

United States Attorney
Northern District of Texas

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

 
 

 

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

 
FOR IMMEDIATE RELEASE
DALLAS, TEXAS
CONTACT: 214/659-8600
www.usdoj.gov/usao/txn
FEBRUARY 22, 2007
   

FEDERAL GRAND JURY INDICTS LUBBOCK BUSINESSMAN ON
TAX AND STRUCTURING CHARGES

A federal grand jury in Lubbock returned an indictment yesterday charging businessman, Mike Hogan, Jr., with one count of corrupt interference with the Internal Revenue laws and two counts of structuring currency transactions, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. Hogan owns and operates several businesses in and around Lubbock and at various times these businesses included Lubbock Mattress Sale, LLP, Discount Furniture Outlet, Smoker’s Outlet LLC, all on 34th Street in Lubbock, and the Phillips 66 Restaurant in Slaton, Texas. Hogan is expected to surrender to federal authorities and appear before a U.S. Magistrate Judge in Lubbock within the week for his initial appearance.

The indictment alleges that beginning in January 1999 and continuing until April 10, 2006, Mike Hogan, Jr. corruptly endeavored to obstruct and impede the due administration of the Internal Revenue Code and the ascertainment, assessment, computation and collection of federal income taxes.

During part of that time, Hogan paid his employees in cash and failed to withhold federal employment taxes and to issue Internal Revenue Service Forms W-2 and W-4. However, in July 2001, based on Hogan’s representations that he had no significant assets or income, the Internal Revenue Service closed its collection cases relating to his 1999 and 2000 employment taxes as “Not Collectible.”

In 2000 through 2001, Hogan opened and operated the Phillips 66 Restaurant and Discount Furniture Outlet that he did not report on his federal income tax returns. In January 2001, Hogan opened a bank account in the name of Donna McClanahan, an ex-wife of his, at American Bank of Commerce in Wolfforth, Texas, and deposited approximately $161,142.32 in business receipts in it during 2001. A couple of months later, Hogan opened a bank account in the name of Jennifer Rayos, his sister-in-law, in the same bank into which he deposited approximately $42,462.43 in business receipts during 2001. In August 2001, Hogan opened a bank account in the names of Donna McClanahan and Mike Hogan at Bank of America in Lubbock and deposited business receipts totaling approximately $195,857.58 during 2001 and 2002.

The indictment further alleges that from 2001 through 2005, Hogan structured currency transactions at Lubbock National Bank in an attempt to cause the bank to avoid currency reporting requirements. In addition, from 2002 through 2006, in order to confuse the Internal Revenue Service, Hogan transferred money between the various accounts he held at Lubbock National Bank.

According to the indictment, from June through December 2005, Hogan cashed business checks totaling $353,862.41 at Lubbock National Bank that he did not deposit into his accounts. During the four-year period 2001 through 2004, Hogan’s total bank deposits were $4,400,769.49, while his reported gross receipts were $3,150,362, a difference of $1,250,407.49.

From 2001 through 2004, Hogan concealed large amounts of cash at his residence. On April 17, 2002, approximately $70,000 cash was stolen from Hogan at his residence and on January 14, 2004 he had approximately $100,000 cash stolen. Hogan used cash for his personal expenses.

Hogan also divided his income between two sets of books that he kept for his business --- one for recording the portion of sales to be reported for tax purposes and the other set, consisting mostly of cash, recording sales that were to be concealed from the Internal Revenue Service.

Hogan also provided false income and expense information to his tax preparer and CPA for preparation of his individual and business income tax returns that falsely under-reported business income and over-reported business expenses.

The indictment also alleges that in May 2005, Hogan made false statements to Internal Revenue Service agents, including false statements regarding bank accounts that he maintained; the bookkeeping of his businesses; the filing of his 2003 U.S. Individual income tax return; and, records that he provided to his return preparers. Sometime after May 25, 2005, Hogan instructed his employees to remove records of cash sales for 2003 and 2004 and change monthly sales summaries to ensure the summaries didn’t show cash sales. On March 29, 2006, Hogan assaulted an employee who threatened to cooperate with the Internal Revenue Service against the Hogan.

An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the maximum statutory penalty for the tax charge is three years in prison and a $250,000 fine. The maximum statutory sentence for the structuring charges are 10 years in prison and a $500,000 fine, per count convicted. Restitution could be ordered.

U.S. Attorney Roper praised the investigative efforts of the Internal Revenue Service - Criminal Investigation. The case is being prosecuted by Assistant U.S. Attorney Roger McRoberts of the Lubbock, Texas, U.S. Attorney’s Office.

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