Source: United States Department of Justice News
MISSOULA — The co-owner of H & H Earthworks, Inc., a Belgrade-based construction company that does commercial site-development work in four states, admitted to failing to pay the IRS approximately $2.8 million in employee and employer taxes, and instead, spent some of the money on personal expenses, including recreational and motorsport vehicles, U.S. Attorney Leif M. Johnson said today.
Melissa Lynne Horner, 42, of Bozeman, pleaded guilty on April 8 to one count of failure to truthfully account for and pay over withholding and F.I.C.A. taxes, a felony, and one count of failure to file employer’s quarterly return and pay tax, a misdemeanor, during an arraignment and plea change hearing. Horner faces a maximum of five years in prison, a $250,000 fine and three years of supervised release on the felony charge. Horner was charged in a 34-count information.
A plea agreement reached by the parties calls for the government to seek the dismissal of 32 remaining counts and for Horner to be responsible for total restitution of $2,878,522 if the court accepts the agreement at sentencing.
U.S. Magistrate Judge Kathleen L. DeSoto presided. Sentencing was set for Aug. 10 before U.S. District Judge Dana L. Christensen. The court will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. Horner was released pending further proceedings.
“As the financial executive for Earthworks, Horner withheld nearly $3 million from employee wages to cover payroll, Medicare and Social Security taxes. Rather than pay over those amounts to the IRS as required by law, Horner spent the money on personal expenses like motorcycles, a motor home, and home renovations. As the deadline for filing tax returns approaches, the public should be aware that people like Horner who willfully violate the tax laws will be investigated and charged with felony tax crimes that can result in significant penalties including prison time, fines, and restitution,” U.S. Attorney Johnson said.
“Payroll tax evasion is not just a crime against the United States Government, but also a crime impacting the employees of Earthworks as it results in the reduction of their benefits.” said Andy Tsui, IRS Criminal Investigation Special Agent in Charge, Denver Field Office. “IRS Criminal Investigation will vigorously pursue anyone who collects these taxes and uses these funds for their own personal gain.”
In court documents filed in the case, the government alleged that H & H Earthworks, Inc., is a Belgrade-based family business co-founded in 2004 by Horner, who is responsible for the financial portion of the business. Earthworks is a full-service commercial site-development firm whose projects include schools, shopping centers, hospitals and residential subdivisions in Montana, North Dakota, Wyoming and Idaho. The company employed between 20 and 60 employees during 2014 through 2019.
For approximately five years, beginning in March 2014 through 2019, Horner had Earthworks pay hundreds of thousands of dollars of expenditures for her personal benefit while, at the same time, it failed to pay over to the IRS payroll tax required to be withheld from Earthworks’ employees’ paychecks. Horner spent more than $100,000 to purchase and maintain personal motorsport vehicles, including dirt bikes and snowmobiles, $90,000 to a real estate title company in Bozeman, at least $50,000 on personal home renovations and $20,000 for a motorhome.
The government further alleged that Horner withdrew Federal Insurance Contribution Act (FICA) taxes from the wages paid to Earthworks employees and failed to pay over the trust fund taxes to the IRS. Horner also failed to pay over Earthworks’ portion of the FICA taxes (Social Security and Medicare taxes). In addition, Horner failed to file quarterly Forms 941, Employer’s Quarterly federal tax returns, prior to being notified of the criminal investigation. Horner subsequently filed the delinquent forms; however, she has not paid any of the outstanding tax liability for them. Horner knew she was required to account for and pay over the employment taxes and file the quarterly Forms 941 and willfully chose to violate this obligation.
Assistant U.S. Attorney Karla E. Painter is prosecuting the case, which was investigated by the IRS Criminal Investigation.
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