Richard Kellogg Armstrong, 77, of
Prescott, Ariz., was sentenced today by U.S. District Court Judge Robert E.
Blackburn to 108 months in prison followed by three years of supervised
release. Judge Blackburn ordered the
sentence to run con secutively to the 660 day prison term and $1,021,500 of
fines cumulatively imposed upon Armstrong as punitive sanctions for 10 acts of
contempt of court. He also ordered Armstrong to pay restitution to the Internal
Revenue Service (IRS) in the amount of $1,678,834 and to forfeit two residences
and a personal aircraft. The sentence
was announced by the Justice Department’s Tax Division, the U.S. Attorney’s
Office for the District of Colorado and the IRS Criminal Investigation Denver
Field Office. Codefendant Curtis L. Morris,
age 43, of Elizabeth, Colo., is scheduled to be sentenced on Nov. 6, 2012.
Armstrong was found guilty on April 30, 2012,
after a three week jury trial, of one count of mail fraud, eight counts of
filing false claims against the United States, three counts of engaging in
monetary transactions in property derived from mail fraud, and one count of
conspiracy to defraud the United States. According to the testimony at trial,
Armstrong, Morris and others conspired to file false tax returns claiming large
tax refunds based upon fictitious federal income tax withholdings taken from
bogus IRS Forms 1099-OID for themselves and others. Armstrong personally
received over $1.6 million in fraudulent tax refunds and, according to the
testimony at trial, quickly moved most of this money into accounts in the names
of shell entities and offshore bank accounts.
“The sentence in this case demonstrates that those who defy the tax laws
by preparing or filing false and frivolous tax returns will be prosecuted and
punished for their conduct,” said Kathryn Keneally, Assistant Attorney General
for the Justice Department’s Tax Division. “The Tax Division remains committed
to prosecuting conduct that attempts to defy our nation’s tax laws.”
“The intent of this refund fraud scheme
was to swindle the government and the taxpaying public” said Richard Weber,
Chief, IRS-Criminal Investigation. “Today's sentencing of Mr. Armstrong again
emphasizes that the Internal Revenue Service and Department of Justice will
continue their aggressive pursuit of those who would attempt to defraud
America's tax system.”
Assistant Attorney General Keneally commended the efforts of
IRS-Criminal Investigation special agents, who investigated the case, and
Assistant U.S. Attorney Kenneth Harmon and Special Assistant U.S. Attorney Kevin
F. Sweeney, who prosecuted the case. Kevin Sweeney is a trial attorney from the
Tax Division, currently on detail to the U.S. Attorney’s Office.
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