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Press Release

Lafayette Man Sentenced For Filing False Income Tax Returns

For Immediate Release
U.S. Attorney's Office, Northern District of Indiana

Hammond, Indiana - United States Attorney David Capp announced that Steven Borchert was sentenced to 51 months of imprisonment and 1 year of supervised release after being found guilty of filing nine false income tax returns for the years 2001 – 2009.

Borchert , age 53, of rural Warren County, Indiana, operated a carpet cleaning business in West Lafayette.Borchert’s business generated over $1.8 million in gross revenue during the years in question which should have been reported on his tax returns.Borchert, however, maintained that only income received directly from the federal government was taxable and that his private income did not constitute reportable income.Borchert filed bogus tax returns and reported “zero income.”Borchert’s arguments were categorically rejected by the district court and the jury.

Borchert’s assertions were based, in part, on the website LostHorizons, and a book called “Cracking the Code” written by Peter Hendrickson. Both the website and book encouraged people to file “zero income” tax returns because the Internal Revenue Code only applied to a very small group of people.Some of the theories included that wages and business activity are not income under the Code.The website and book fail to mention that Hendrickson has been twice convicted for federal tax offenses. Hendrickson’s most recent conviction was for filing “zero income” tax returns, the same conduct for which Borchert was convicted. For more information, please go to ; US v. Hendrickson, 664 F. Supp. 2d 793 (E.D. MI 2009), and 2103 WL 1759170 (E.D. MI 2013).

United States Attorney Capp stated, “The Borchert conviction should serve as fair warning to any other persons who subscribe to this “zero income” argument.The United States Attorney’s Office, in conjunction with the Internal Revenue Service, will continue to vigorously investigate and prosecute those who file these bogus tax returns.”

This case was the result of an investigation by the Internal Revenue Service and was prosecuted by Assistant United States Attorney Gary Bell.

Updated April 30, 2015