A federal jury has convicted a husband-wife team of tax fraud in connection with a construction business they ran which funneled profits to their church.
David and Bridget Montgomery argued that if the money went to the church, it shouldn't be taxed as income, but prosecutors for the Department of Justice and the IRS (not to mention the jury) disagreed. More than $600,000 in taxable income went unreported, court documents showed.
The Montgomerys built and repaired other local churches.
Mr. Montgomery's defense was that a friend in the construction industry, since deceased, advised him that if he ploughed funds earned from their construction business into their church, they did not have to report it to the IRS and pay tax on it. Mrs. Montgomery contended that she made mistakes because she was in over her head when she prepared the returns.
Blame the old dead friend: Didn't work this time.
The scam went on from January 2003 until April 2006 and was not limited to under-reporting income, prosecutors said:
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[T]he government presented evidence that they repeatedly manipulated financial information according to their financial interest. For instance, they claimed more income than they reported to the IRS in applications for a $900,000 loan and in several applications for credit to purchase luxury automobiles.
We assume the old, dead friend gave the thumbs-up for that strategy, too. The bastard.
The two face up to five years in prison and a $250,000 fine for the conspiracy conviction and a maximum of three years and a $100,000 fine on each of the false statements convictions.