Former Champaign Business Owner Pleads Guilty To Filing False Income Tax Returns
Urbana, Ill. – Sentencing is scheduled on May 8, 2015, for former business owner Michael S. Fogerson of Champaign, Ill. Yesterday, Fogerson pleaded guilty to two counts of filing a false tax return, as announced by Jim Lewis, U.S. Attorney for the Central District of Illinois. Fogerson remains on bond following his appearance yesterday before U.S. District Judge Harold A. Baker.
According to court documents, Fogerson, 51, was the owner, sole proprietor, and operator of The Smoke Shack in Champaign, Ill., and The Smoker’s Den in Decatur, Ill. During 2009, 2010, and 2011, The Smoke Shack sold tobacco-related products, as well as synthetic marijuana prior to its regulation by state and federal authorities. For tax years 2009 and 2010, Fogerson sold bulk quantities of synthetic marijuana to tobacco product stores similar to The Smoke Shack that operated outside of the Champaign and Decatur area. To lower his individual adjusted gross income, Fogerson failed to report the profits generated from these bulk sales to the Internal Revenue Service. Fogerson admitted he failed to report the profits.
As a result of the unreported receipts from his bulk sales of synthetic marijuana, Fogerson falsely claimed only $28,307 of taxable income on his 2009 Form 1040. In reality, Fogerson had taxable income of approximately $393,799. Thus, Fogerson had an additional income tax due and owing to the United States of America of approximately $128,720 for the 2009 tax year, which he did not pay. Fogerson falsely claimed only $54,522 of taxable income on his 2010 Form 1040. In reality, Fogerson had taxable income of approximately $968,579. Thus, Fogerson had an additional income tax due and owing to the United States of America of approximately $336,491, which he did not pay.
During the investigation, the Internal Revenue Service seized $835,421.89 from Fogerson that was alleged to have been deposited in amounts less than $10,000 to avoid having the bank report the deposits to the Internal Revenue Service. As part of his plea of guilty, Fogerson agreed that $465,211 of the seized currency would be used to pay his back taxes for 2009 and 2010 and that the remaining currency would be forfeited to the United States Treasury.
The maximum statutory penalty for each count of filing a false tax return is three years in prison, and a fine of up to $100,000, plus the costs of prosecution.
The case is being prosecuted by Assistant U.S. Attorney Eugene L. Miller. The charges are the result of an investigation by Internal Revenue Service, Criminal Investigation Division.