Richard Kellogg Armstrong of Arizona, age 77, was sentenced on August 10 to nine years in prison followed by three years of supervised release. The judge ordered the sentence to run consecutively to the 660-day prison term and $1,021,500 of fines cumulatively imposed on Armstrong as punitive sanctions for ten acts of contempt of court.
Armstrong is also ordered to pay restitution to the IRS in the amount of $1,678,834 and to forfeit two residences and a personal aircraft.
Codefendant Curtis L. Morris, age 43, of Colorado, is scheduled to be sentenced on November 6, 2012.
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.
Morris worked as an accountant, bookkeeper, and business consultant and was self-employed, part-time, as an income tax preparer, doing business under the trade name "Numbers and Beyond."
On April 30, 2012, after a three-week jury trial, Armstrong was found guilty 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.
Prosecutors say Armstrong, who was one of Morris' tax clients, received more than $1.6 million from bogus returns and hid the proceeds in offshore bank accounts while recruiting for and promoting the scheme.
Source: US Department of Justice