WASHINGTON D.C. (WLNS) — A Michigan man was sentenced to 38 months in prison on Tuesday after a nearly decade-long effort to prevent the IRS from collecting unpaid taxes.
Okemos and East Lansing local Scott Chappelle, 61, was an attorney and CPA who operated three businesses that were involved in real estate development and property management.
Chappelle admitted that he did not pay the IRS employment taxes that were taken out of his employees’ wages.
According to the U.S. Department of Justice, when the IRS would attempt to collect the taxes, Chappelle lied about his assets and the income of his three companies.
Chappelle even went as far as to hide his vacation home on Lake Michigan and bought properties using the names of his businesses rather than his given name.
Rather than working hard and playing by the rules, Scott Chapelle broke the law. Chapelle spent cash that wasn’t his – funds withheld from his workers as employment taxes, which he then hid from the IRS – to support an extravagant lifestyle he didn’t earn. Now and always, my office will hold individuals and businesses accountable who refuse to follow the rules.U.S. Attorney Mark Totten for the Western District of Michigan
Chappelle told the IRS that he and his companies could not afford to pay their tax debts because of financial hardships, while he simultaneously paid personal expenses using bank accounts in the names of at least six different businesses he controlled.
The personal expenses included:
- Mortgage payments on three houses and a condominium
- Payments toward the purchase of a yacht
- College tuition for his children
- Plastic surgery
- Personal credit card bills
- Life insurance premiums
- Car payments for Chappelle and one of his children
- Expenses associated with boats he owned
During the investigation, Chappelle filed a false employment tax return for his company Terra Holdings, falsely reporting that the company had no employees and paid no wages during the period covered by the return.
In actuality, the company had employees and paid wages during that period because Chappelle approved submissions to the company’s payroll provider.
Chappelle additionally falsified statements on a loan application when he refinanced the mortgage on his Lake Michigan vacation house in Harbor Springs.
According to court filings, Chappelle submitted fabricated bank statements to the mortgage company to make it appear as if his company had substantially more money in its account than it actually had.
He also falsely blamed another employee of his company for fabricating the bank statements.
In addition to prison time, Chappelle is to serve three years of supervised release and pay $1,233,836 in restitution to the United States.