Monday, April 4, 2016

Former US Tax Court Judge Kroupa Indicted (4/4/16; 4/5/16)

The US Attorney for Minnesota announced, here, the indictment of former Tax Court Judge Diane L. Kroupa and her husband, Robert E. Fackler.  The indictment is here.  (This copy is the one linked in the announcement; it does not have file stamps but does indicate that it was the final.) The charges for each are:  "conspiracy, tax evasion, making and subscribing false tax returns and obstruction of an IRS audit."

Kroupa resigned from her judgeship somewhat unexpectedly in June 2014. According to the US Attorney press release, the charges relate to the two claiming personal expenses as business expenses of the husband's consulting business, failing to report income from a land sale, concealing documents from the preparer and then obstructing the audit. Here are excerpts::
They fraudulently claimed the following personal expenses as deductible business expenses: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, The Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. 
According to the indictment and documents filed in court, KROUPA and FACKLER made a series of other false claims on their tax returns, including failing to report approximately $44,520 that KROUPA received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income. 
According to the indictment and documents filed in court, in 2006, KROUPA and FACKLER concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit. During a second audit in 2012, KROUPA and FACKLER caused misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. 
According to the indictment and documents filed in court, between 2004 and 2010, KROUPA and FACKLER purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $400,000.
JAT Comments:

Right now, I can make only one comment -- if the allegations are proven, it is deeply disappointing that a judge would have participated in conduct -- particularly of the scope alleged.

I never tried a case before Kroupa, but I have had occasion to observe her work and occasionally to blog on her work.  See the blog entries with her name here.  My impression of her work -- and this is purely anecdotal from the limited data set of observations -- is that she was a pretty good judge.

Kroupa's Wikipedia entry is here.  The Wikipedia entry links to her Tax Court bio here which appears to be out of date.

Addendum 4/5/16 10:00am:  I will post a series of blogs beginning today for students and new practitioners that will discuss some aspects of the indictment.  I list the blog entries below, starting with the first:

  1. Former Tax Court Judge Kroupa Indictment - Part I - Conspiracy (Federal Tax Crimes Blog 4/5/16), here.

No comments:

Post a Comment

Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.