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Press Release

Kansas Aesthetics Business Owner Sentenced to Prison for Tax Evasion

For Immediate Release
Office of Public Affairs

A Leawood, Kansas business owner was sentenced yesterday to 51 months in prison after being convicted of tax evasion following a five-week jury trial in April announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division and Acting U.S. Attorney Thomas Beall of the District of Kansas.

According to the evidence at trial, Kathleen M. Stegman, 58, owned and operated Midwest Medical Aesthetics (Midwest).  During the years 2006 through 2010, Stegman concealed cash receipts, diverted hundreds of thousands of dollars from Midwest for her personal use, created and used an entity to falsify business expenses and hide Midwest customer checks and falsely claimed as business expenses a mortgage payment on an investment property, the cost of an invisible dog fence, residential gas and electricity bills, Mercedes Benz lease payments and an investment in a deck coating product.  The government also presented evidence that Stegman used the money she diverted from Midwest to fund a lavish lifestyle, including the purchase of condominiums in Las Vegas, over $300,000 in gold coins, a 54-foot yacht and real estate in North Carolina.    

The evidence presented also established that Stegman caused an employee to destroy business records during a civil tax audit, provided the Internal Revenue Service (IRS) with false and altered documents and attempted to tamper with a witness’s statement to criminal investigators.

In addition to the prison term, U.S. District Judge Julie Robinson ordered Stegman to pay restitution to the IRS in the amount of $68,733 as a condition of supervised release and a fine in the amount of $100,000.

Principal Deputy Assistant Attorney General Ciraolo commended special agents of IRS-Criminal Investigation, who conducted the investigation and Trial Attorneys Ryan R. Raybould and John T. Mulcahy of the Tax Division and Assistant U.S. Attorney Jabari B. Wamble of the District of Kansas, who prosecuted the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

Updated October 19, 2016

Press Release Number: 16-1221