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Justice News

Department of Justice
U.S. Attorney’s Office
District of Montana

Monday, April 13, 2015

Former Stone Child College President Pleads Guilty to Tax Fraud

GREAT FALLS – Former Stone Child College President Melody Henry, 50, of Box Elder, and her husband, Frank Gregory Henry, 51, the former Facilities Manager at the College, entered guilty pleas to federal income tax fraud during a hearing today before U.S. District Judge Brian Morris in Great Falls.  The Henrys face a potential sentence of three years imprisonment, a $100,000 fine and a year of supervised release, together with the costs of prosecution. Sentencing has been set for July 27, 2015, in the Missouri River Courthouse in Great Falls.

The Henrys had been indicted for taking almost a quarter of a million dollars in kick-backs from Hunter Burns and Hunter Burns Construction between October of 2010 and November of 2012.  Melody Henry had approved $530,242 in contracts to Hunter Burns Construction in her role as President of Stone Child College.  The payments were never disputed but the Henrys claimed that he had, in addition to his full-time employment at the College, done work at the College on behalf of Hunter Burns Construction and therefore the payments were not kick-backs but payments for services rendered.  A federal jury acquitted the Henrys after a three day trial in February.  

In the tax fraud indictment, prosecutors alleged that the Henrys had attempted to evade payment on the monies received by them from Hunter Burns Construction by claiming business expenses in an amount that would eliminate any tax liability. For the tax year 2012 the Henrys claimed their salaries from Stone Child College—totaling $246,586—and business income from Hunter Burns Construction in the amount of $124,537 for a total annual income of $371,124.  On a Schedule C (Profit or Loss From Business) the Henrys claimed $135,146 in business expenses which completely off-set the income received from Hunter Burns Construction and resulted in a business loss.

In an offer of proof filed by the government to support the defendants’ pleas, the United States Attorney told the Court that the Henrys claimed $20,283 in vehicle expenses, $15,000 in contract labor, $6000 in insurance costs, $3000 in office expenses, $3,600 in office rental, $15,998 in repairs and maintenance, $9,035 in supplies, $10,000 in employee wages, $35,500 in newly purchased equipment, and $4,200 in telephone costs. A forensic financial review of the defendants’ bank account records by the Internal Revenue Service did not reveal any expenditures consistent with the expenses claimed on Schedule C.  Prosecutors have agreed that if the civil IRS review indicates that some of the expenses claimed were legitimate they would reduce the restitution award which will be, by stipulation of the parties, $47,301 in tax due and owing for 2012.  All other tax liability, for other years, will be dealt with directly by the IRS.

The case was brought by the federal agents of the Guardians Project and was investigated by the agents of the Offices of Inspector General of the Departments of Interior, Health and Human Services, and the Environmental Protection Agency, as well as by the Internal Revenue Service Criminal Investigation Division.  

Updated April 13, 2015