Letcher Father and Son Sentenced on Conspiracy and Tax Crimes

United States Attorney Randolph J. Seiler announced that Theodore “Ted” J. Nelson, Jr., age 68, and his son, Steven A. Nelson, age 46, both of Letcher, South Dakota, were sentenced on April 4, 2016, for conspiracy to defraud the United States, failure to file income tax returns, and impeding the Internal Revenue Service.

          U.S. District Judge Karen E. Schreier sentenced Theodore Nelson to seventy months in prison, and his son Steven Nelson to twelve months and one day in prison, and ordered to pay restitution jointly and severally in the amount of $1,842,102.14.  In May 2015, they were found guilty of tax crimes as a result of a federal jury trial in Sioux Falls, South Dakota.  

          The Nelsons were indicted by a federal grand jury on July 9, 2013.  Ted Nelson was charged with one count of conspiracy to defraud the United States, six counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service. Steven Nelson was charged with one count of conspiracy to defraud the United States, seven counts of failure to file income tax returns, and one count of impeding the Internal Revenue Service.

          The Nelsons inherited a family farm and business from Ted Nelson’s parents.  They planted and sold grain, raised cattle, performed custom work for neighbors, ran hunting/lodging businesses, leased out their land, and sold some of the land.

          The Internal Revenue Service placed a lien against Ted Nelson’s real estate in January 2004.  After that time, the Nelsons created over 30 trusts, corporations, LLCs, and other entities, in an effort to hide their ownership of the farm and its income.  Also in 2004, the Nelsons opened a series of bank accounts with themselves or another person as signors, using false tax identification numbers and Social Security numbers. Steve Nelson filed income tax returns through 1996 and Ted Nelson filed them through 1998, and then both stopped filing.

          “The lesson learned from this case should be very clear,” said U.S. Attorney Seiler.  “Regardless of how elaborate your strategy is, and no matter what you do for a living, if you intentionally dodge your responsibility to pay your fair share of taxes, federal prison will be a consequence of that decision.”

          “As filing season comes to an end, the sentencings imposed on the Nelson’s should send a message to those taxpayers who are thinking about participating in fraudulent tax schemes," said Shea Jones, Special Agent in Charge of the St. Paul Field Office.  "The sentencings of Theodore Nelson and Steven Nelson again emphasizes that the Internal Revenue Service and U.S. Attorney’s office will continue their aggressive pursuit of those who would attempt to defraud America's tax system."     

          This case was investigated by the Internal Revenue Service – Criminal Investigation. Assistant U.S. Attorneys John E. Haak and Ann M. Hoffman prosecuted the case.

          Steven Nelson was ordered to self-surrender to the U.S. Marshals Service on April 18, 2016.  Ted Nelson, who was remanded to the custody of the U.S. Marshals Service after trial, remains in custody.

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