State Employee Pleads Guilty to $158,000 Fraud Scheme to Pay Refunds to Springfield Business
SPRINGFIELD, Mo. - Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that an employee of the Missouri Department of Revenue pleaded guilty in federal court today to fraudulently paying $158,000 in refunds to a Springfield business owner, who has also pleaded guilty to his role in the scheme, and others.
Roselly Delores Otto, 31, of Meta, Mo., waived her right to a grand jury and pleaded guilty today before U.S. Magistrate Judge David P. Rush to a federal information that charges her with two counts of mail fraud. James Edward Bruhn, 46, of Springfield, waived his right to a grand jury and pleaded guilty on March 13, 2013, before U.S. District Judge Richard E. Dorr to a federal information that charges him with one count of mail fraud.
Otto and Bruhn evenly split $127,905 in proceeds from the fraud scheme between April 2011 and September 2012. Otto also received approximately $30,000 in a separate, but similar, fraud scheme between January 2009 and September 2012. Otto worked for the Taxation Division of the Missouri Department of Revenue. Bruhn operated a lawn care business known as EB Lawncare in Springfield.
As a part of his business, Bruhn would submit motor fuel refund claims to the Taxation Division of the Missouri Department of Revenue. Motor fuel that is used for certain non-highway purposes is exempt from the state fuel tax and a refund may be claimed by the consumer. Part of Otto’s responsibilities included approving or declining motor fuel refund claims received by her division.
Bruhn admitted that he submitted refund documents knowing that his claims that fuel was purchased and that the fuel was used for statutorily exempt purposes was entirely false and fraudulent. Otto admitted that she received the fraudulent refund claims from Bruhn, and even though she knew that the information provided in the documents was entirely false, approved Bruhn’s refund claims. Otto caused refund checks to be mailed to Bruhn. Bruhn cashed his refund checks and mailed a portion of the proceeds back to Otto. The Missouri Department of Revenue detected the fraud, alerted law enforcement authorities and cooperated in the investigation.
Under federal statutes, Otto is subject to a sentence of up to 40 years in federal prison without parole, plus a fine up to $500,000 and an order of restitution. Bruhn is subject to a sentence of up to 20 years in federal prison without parole, plus a fine up to $250,000 and an order of restitution. Sentencing hearings will be scheduled after the completion of presentence investigations by the United States Probation Office.This case is being prosecuted by Assistant U.S. Attorney Patrick Carney. It was investigated by the U.S. Postal Inspection Service and the Missouri Department of Revenue Compliance and Investigation Bureau.