October 19, 2011
FORT COLLINS COUPLE PLEADS GUILTY TO OBSTRUCTING AND IMPEDING THE IRS
DENVER – Gregory E. White, age 66, and Mary L. White, age 67, both of Fort Collins, Colorado, pled guilty before U.S. Circuit Judge David M. Ebel, sitting by designation in U.S. District Court in Denver today, Wednesday, October 19, 2011, to one count of obstructing and impeding the Internal Revenue Service the U.S. Attorney’s Office, IRS – Criminal Investigation, and Treasury Inspector General for Tax Administration announced. Gregory pled guilty to an additional count of making a false claim with the government. Gregory was originally indicted on April 6, 2011; a superseding indictment was filed on May 4, 2011 were Gregory and Mary White, husband and wife, were indicted. The White’s are scheduled to be sentenced by Judge Ebel on January 10, 2012.
According to the stipulated facts contained in the plea agreements and indictments, beginning in September of 2006, IRS special agents began a criminal investigation into the activities of Gregory and Mary White who resided and worked in Fort Collins, CO. The investigation was initially predicated on the fact that the Whites failed to file individual tax returns (jointly or individually) for tax years 2000 to 2005. During this time period, the Whites were receiving income through the operation of their business (White Chiropractic Center). Mary worked at the business during 2000 to 2005 acting as the office manager and overseeing its daily operation. Gregory worked as a chiropractor providing services and generating income from patients. The investigation revealed that the Whites earned sufficient income during the 2000 to 2005 time period which required them to file tax returns. Prior to 2000, the Whites had regularly filed joint personal returns with the IRS setting forth their income and any taxes due and owing.
The investigation determined that for 2004, the adjusted gross income for the Gregory was approximately $74,310, and for 2005, it was $291,730 (figure included the proceeds from the sale of an office building). However, for this time period, no tax returns were filed with the IRS despite being required to do so. As a result, the taxes due and owing was $10,344 for 2004 and $45,316 for 2005 (based on married filing separately status).
Over the course of the IRS Agents’ investigation which spanned from 2006 through 2011, the Whites engaged in a series of acts which were designed to delay, hinder and otherwise obstruct the IRS investigation which included but is not limited to:
(1) Providing misleading information during an interview with IRS agents regarding recent applications for loans or credit. Specifically, on December 8, 2006, during the course of an interview with IRS agents, Mary stated that the Whites recently submitted tax returns listing their income as “unknown” because she had no idea what their income was for the relevant time period. Gregory was present during the interview and actively participating in the interview with IRS agents. Mary denied that either she or her husband had applied for a loan or credit recently. However, the Whites had in fact submitted various credit applications during the two years prior which applications stated their income. For example, in a credit application to Mountain Plains Property Management submitted in May of 2005, the Whites provided an income summary report which specifically listed their income for 2002 to 2005. Such income information was withheld from the IRS agents during the course of the interview.
(2) Submitting personal tax returns to the IRS for 2000 to 2005 which misleadingly omitted income information in an effort to impede the IRS investigation into the Whites previous failure to file income tax returns.
(3) On June 30, 2008, the Gregory filed a personal tax return Form 1040 with the IRS for tax year 2007. The return claimed he was entitled to a refund totaling $116,262. Other than the requested refund, the Defendant’s tax return contained blank entries or entries with a zero figure. The requested refund was based upon the claim that he had money withheld during the past year in connection with an “Original Issue Discount” form. Attached to the return were two original issue discount forms (IRS Forms 1099- OID), which falsely claimed that Gregory White was owed $76,924 and $39,338 (total $116,262) as a result of money withheld in accounts at a bank in Fort Collins. The IRS agents checked with the bank and determined that the IRS 1099-OID forms purportedly filled out by the bank was fictitious and that no such withholdings in Gregory White’s name ever occurred. Accordingly, Gregory’s 2007 return attempting to obtain the above refund was false. Approximately one year later, Gregory again attempted to obtain a substantial refund from the IRS based on false original issue forms. The IRS rejected both of the Defendant’s returns for 2007 and 2008, and made no refund payments.
Gregory White faces not more than 5 years in federal prison, and up to a $250,000 fine, for one count of making a false claim; not more than 3 years in federal prison, and up to a $5,000 fine, for one count of obstructing and impeding the administration of Internal Revenue laws.
Mary White faces not more than 3 years in federal prison, and up to a $5,000 fine, for one count of obstructing and impeding the administration of Internal Revenue laws.
This case was investigated by Internal Revenue Service – Criminal Investigation (IRS CI), and Treasury Inspector General for Tax Administration (TIGTA).
The case is being prosecuted by Assistant U.S. Attorney Timothy Neff.
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