Piedmont Man Sentenced for Failing to Pay Taxes and Concealing Bankruptcy Assets
United States Attorney Randolph J. Seiler announced that a Piedmont, South Dakota, man convicted of Failure to Withhold, Properly Account For, and Pay Over Tax, and Concealment of Bankruptcy Assets was sentenced on May 27, 2016, by Chief Judge Jeffrey L. Viken, U.S. District Court. The Defendant was charged on January 26, 2016, and pleaded guilty on February 12, 2016.
Bernard Haag, age 58, was sentenced to 18 months of imprisonment, 3 years of supervised release, ordered to pay a $200 special assessment to the Federal Crime Victims Fund, $230,854.85 in restitution to the Internal Revenue Service, and $70,000 to various bankruptcy creditors.
During the years 2005 through 2009, Haag was the president and sole shareholder of Big Dog Industries, Inc. (“Big Dog”), a corporation located in Piedmont. During the years 2010 through 2012, Haag was the sole member of Concept Development, LLC (“Concept Development”), a limited liability company located in Piedmont. From 2005 through 2012, Haag used Big Dog and Concept Development to operate a day care business in Piedmont, under the business name Piedmont Preschool and Child Care Center (“PPCCC”).
During the same time period, Haag withheld taxes from his employees’ wages, including federal income tax, social security, and Medicare taxes for employees of Big Dog and Concept Development, and willfully failed to pay over those taxes to the United States for all of 2005 through 2011, and three quarters of 2012. Haag also willfully failed to pay the employer’s portion of taxes on wages paid to employees of Big Dog and Concept Development for all of 2005 to 2012. Rather than paying over the taxes, Haag used a portion of the withholdings for his own personal use.
In 2006, Haag filed for a bankruptcy. During the pendency of his bankruptcy proceeding (2006-2012), Haag knowingly concealed property belonging to his bankruptcy estate from the bankruptcy trustee, including taxes he withheld from employee’s paychecks but failed to pay over to the government during the years 2005 through 2011. Haag also concealed substantial amounts of gross income related to the operation of PPCCC from the bankruptcy trustee.
The investigation was conducted by the Internal Revenue Service Criminal Investigation Division. Assistant U.S. Attorney Benjamin Patterson prosecuted the case.