Thursday, July 23, 2009

[KNOXVILLE, TENN]– Kevin M. Flannery, 62, Margaret A. Flannery, 60, and Keith M. Flannery, 40, all of Gatlinburg, Tennessee, have been indicted by a federal grand jury in Knoxville, Tennessee, and charged with one (1) count of conspiracy to impede the lawful government functions of the Internal Revenue Service. The maximum penalty on this count is up to five (5) years imprisonment, up to a $250,000 fine, a $100 special assessment and up to three (3) years supervised release. Additionally, Kevin Flannery was charged with three (3) counts of filing false income tax returns, and his wife, Margaret Flannery, was charged with four (4) counts of filing false income tax returns. The maximum penalty on each of these counts is up to three (3) years imprisonment, up to a $250,000 fine, a $100 special assessment, and up to one (1) year supervised release.

The Flannerys had an initial appearance today before the Honorable H. Bruce Guyton, United States Magistrate Judge, at the United States Courthouse, Knoxville, Tennessee. The case is set for trial before the Honorable Thomas W. Phillips, United States District Judge, on September 30, 2009.

According to the indictment, from approximately June 20, 2001, until about November 2, 2006, the Flannerys conspired to obstruct or impair the lawful functions of the Internal Revenue Service (IRS). The indictment states that X.M.K.M. Enterprises, Inc., doing business as Famous Fries, and M.K.M.K. Associates, Inc., doing business as Southland Car and Jeep Rental were both family run businesses operating in Gatlinburg, Tennessee.

The indictment alleges that Kevin and Margaret Flannery maintained two sets of books and records for Southland Car and Jeep Rental and Famous Fries, one set of books being income schedules of the actual gross income earned by both businesses, and another set of books containing fabricated gross income figures for the businesses, which severely under-reported the businesses’ gross income. The indictment states that the first set of books were kept at the Kevin and Margaret Flannerys’ home for their personal use so they would know the true financial condition of the businesses. The second set of books were used to provide false income figures to their accountants for reporting to the IRS.

The indictment charges that Kevin Flannery filed false corporate income tax returns for M.K.M.K. Associates, Inc., for tax years 2002, 2003, and 2005. Margaret Flannery was charged with filing false corporate income tax returns for X.M.K.M. Enterprises, Inc., for tax years 2002, 2003, 2004 and 2005. The indictment alleges that these corporate tax returns significantly under-reported the corporations’ gross receipts or sales in each year.

The public is reminded that an indictment is a form of accusation and is not evidence of guilt. The defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This investigation was conducted by IRS Criminal Investigation. Assistant U.S. Attorney J. Edgar Schmutzer will represent the United States.

For additional information, please contact United States Attorney James R. “Russ” Dedrick, Assistant U.S. Attorney Ed Schmutzer, or Public Information Officer Sharry Dedman-Beard at 865-545-4167.