Assistant Attorney General for the Tax Division Kathryn Keneally, U.S. Attorney for the District of Idaho Wendy J. Olson and the Internal Revenue Service (IRS) announced today that a Coeur d’Alene, Idaho, jury convicted Michael George Fitzpatrick, 51, of Hope, Idaho, of two counts of income tax evasion after a four-day trial before U.S. District Judge Larry A. Burns. In September 2012, Fitzpatrick was tried on four tax fraud counts. That jury rendered guilty verdicts on two counts of failure-to-file 2004 corporate income tax returns but was unable to reach verdicts on the tax evasion counts. The verdict today was the result of a second trial on those two charges. Fitzpatrick was remanded into custody immediately.
According to the indictment and evidence introduced at both trials, Fitzpatrick operated a business selling products which purported to help individuals eliminate credit card debt. During 2003 and 2004 the business’s gross sales exceeded $9 million, operating under the names Dynamic Solutions Inc. (DSI) and NAES. The evidence proved Fitzpatrick last filed an individual income tax return in 1996. At trial the government proved the corporations failed to report $3.7 million and Fitzpatrick himself failed to report over $500,000 in income, resulting in a total tax loss of almost $1.4 million.
The evidence at trial established that Fitzpatrick sent over $5 million offshore to WWIN, a “warehouse” bank located in the Dominican Republic. Fitzpatrick accessed this money through the use of a debit card and through wire transfers. During a two-year period, Fitzpatrick used his offshore funds to purchase his personal residence and two four-unit apartment buildings in northern Idaho, with a combined cost of over $700,000. Fitzpatrick also wired $114,980 from his offshore bank accounts to the Bellagio Casino during nine trips to Las Vegas.
Sentencing is scheduled for May 13, 2013. The maximum penalty Fitzpatrick faces on each count of tax evasion is five years in prison and a $250,000 fine. The two convictions for failure to file corporate income tax returns each carry a maximum penalty of one year in prison and a $100,000 fine.
“Paying income tax is a solemn obligation of citizenship,” said Olson. “Those who hide income and evade taxes by sending money off-shore, undermine our democracy. This verdict sends a strong message that those who seek to avoid their tax responsibilities will be punished to the fullest extent of the law.”
“This verdict should send a clear message, it’s imperative for all Americans to pay their share of taxes and those who commit income tax evasion will be brought to justice,” said Stephen Boyd, IRS Criminal Investigation Special Agent in Charge for the State of Idaho.
The case was investigated by special agents from the Boise, Idaho, office of IRS-Criminal Investigation and prosecuted by Tax Division Trial Attorneys Lori A. Hendrickson, Christopher P. O’Donnell and Erin S. Mellen, with valuable support from the U.S. Attorney’s Offices in Boise and Coeur d’Alene.
Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.