BUSINESSMAN GETS 5 YEARS IN PRISON FOR FRAUD AND TAX EVASION

The following excerpt is from the Department of Justice website:

“Wednesday, November 16, 2011
Former Pittsfield, Mass., Entrepreneur Sentenced to More Than Five Years in Prison for Financial Crimes
WASHINGTON - A former Pittsfield man was sentenced late yesterday in federal court for his role in a series of frauds and attempts to avoid paying taxes, as well as lying to federal authorities and financial institutions about his illegal activities, announced Assistant Attorney General Lanny A. Breuer of the Justice Department’s Criminal Division; U.S. Attorney Carmen M. Ortiz for the District of Massachusetts; William P. Offord, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) - Boston Field Office; and Theodore L. Doherty III, Special Agent in Charge of the New England Regional Office of the U.S. Department of Transportation, Office of Inspector General (DOT-OIG).
Michael J. Armitage , 56, was sentenced by U.S. District Judge Michael A. Ponsor to 66 months in federal prison to be followed by five years of supervised release. Armitage was ordered to forfeit $24,010, and pay restitution of $1.5 million to the IRS; $191,819 to the Massachusetts Department of Revenue; $4.2 million to the Federal Transit Administration; and $215,138 to the Pioneer Valley Transit Authority. Armitage pleaded guilty in October 2010 to three counts of false statements to a federally insured financial institution; three counts of tax evasion; one count of false statements to a federal official; one count of conspiracy, one count of false claims; and one count of endeavoring to obstruct a federal audit.
According to court documents, Armitage did not file a single personal federal income tax return between 1993 and 2006 in spite of receiving millions of dollars in income from sources such as Power Development Co. LLC (PDC), an energy company that he founded and controlled. In addition, in 1999, Armitage was required to repay more than $1 million to PDC for money that he had misappropriated, including approximately $340,000 in checks that he had written to himself but fraudulently mislabeled in PDC’s check register as payable to others.
From February 2001 to April 24, 2006, Armitage executed a scheme to defraud United Bank, located in West Springfield, Mass., in connection with three separate loans. According to court documents, Armitage used or submitted various false or fraudulent documents to perpetrate these fraud schemes, including a 2001 personal financial statement that omitted any debts owed to the IRS or to PDC and on which he claimed that his taxes were settled through 1999, and a 2001 personal federal income tax return that he signed and dated but never filed with the IRS.
In addition, between Aug. 20, 2001, and Oct. 18, 2006, Armitage attempted to avoid paying taxes that had been previously assessed for three separate years: 1995, 1996 and 1998. Armitage engaged in several efforts to avoid paying taxes for these years. He withheld material information from his tax representative. He directed his tax representative to contact an IRS Revenue Officer and claim that delinquent returns would be filed, when he did not intend to provide the tax representative with the information to prepare the returns. He made materially false statements to an IRS Revenue Officer. He purposely withdrew funds recently deposited in his bank account to maintain a low account balance. He diverted payments due to himself to other accounts, including his wife’s bank account, the bank account of another company that he controlled, and an escrow account belonging to another person. Finally, he used funds from an account that he controlled to pay credit cards issued in his name, all to conceal income and avoid collection.
In another scheme, from Nov. 30, 2004, through at least July 5, 2006, Armitage conspired with co-defendants EV Worldwide LLC (EVW), a company that he controlled, and Christopher Willson, another executive of EVW, to defraud the Federal Transit Administration. According to court documents, Armitage and his co-defendants submitted false, fraudulent and fictitious invoices for payment through the Pioneer Valley Transit Authority as part of a federal research grant into an electric bus and battery project. On these invoices, Armitage falsely claimed that the Federal Transit Administration’s share of the project costs did not exceed the maximum 50 percent. He also sought reimbursement for fictitious, inflated or ineligible expenses, and/or falsely claimed that certain milestone achievements warranted payment of EVW Worldwide’s claimed expenses. Through the fraudulent invoices, Armitage, Willson and EVW received $703,097 to which they were not entitled, and used this money for their own benefit as well as the benefit of another company that Armitage and Willson founded in Canada. After the Department of Transportation, Office of Inspector General commenced an audit in 2006, Armitage repeatedly lied to and attempted to obstruct the auditors.
Willson, who was convicted at trial in June 2011 on one count of conspiracy to defraud the United States and to commit wire fraud, six counts of wire fraud and four counts of false claims, is scheduled to be sentenced on Nov. 29, 2011, at 2:30 p.m.
The case investigated by IRS-CI and the DOT-OIG. The Defense Contract Audit Agency also assisted with the investigation. The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow for the District of Massachusetts; Senior Litigation Counsel William M. Welch II of the Justice Department’s Criminal Division; and Trial Attorneys Kevin Driscoll and Edward J. Loya Jr. of the Criminal Division’s Public Integrity Section.”