SANDPOINT — Federal prosecutors are recommending more than six years in prison for a Hope man convicted of dodging his personal income taxes and failing to file corporate tax returns.
Michael George Fitzpatrick is scheduled to be sentenced in U.S. District Court in Coeur d’Alene on May 13.
Prosecutors are recommending a sentence of 78 months and $1.4 million in restitution to the Internal Revenue Service. The prosecution is also seeking three years of supervised release after he’s released from prison and a $125,000 fine if restitution is not ordered, federal court documents indicate.
Fitzpatrick, 51, indicted by a grand jury in 2010 on two counts of failing to file individual tax returns and two counts of failing to file corporate tax returns for two entities he operated. The crimes occurred in 2003 and 2004, according to charging documents.
A jury convicted Fitzpatrick in 2012 of failing to file corporate tax returns for North American Educational Services and Dynamic Solutions Inc., but could not reach unanimous verdicts on the personal income tax violations.
Fitzpatrick’s sentencing was postponed pending retrial on the personal income tax lapses. A jury convicted Fitzpatrick of the remaining counts earlier this year.
The government argued at trial that Fitzpatrick operated DSI, a debt-relief program targeting those with weighty debt loads. Marketers from DSI testified that the program was lucrative and the IRS calculated that the company brought in $3.2 million in 2003 and at least $3 million in 2004.
To prove Fitzpatrick personally benefited from the success of his business, there was testimony that Fitzpatrick purchased $700,000 in real estate, spent nearly $125,000 on gambling jags at the Bellagio Casino in Las Vegas and acquired expensive vehicles.
Prosecutors contend that Fitzpatrick concealed his gains by using offshore accounts in the Dominican Republic and hid assets by titling real and personal property in the names of corporate nominees.
The statutory maximum for all four counts is 144 months in prison, although sentencing guidelines in Fitzpatrick’s case recommend a sentencing range of 63 to 78 months.
Prosecutors are seeking a sentence at the high end of the range due to sophistication of Fitzpatrick’s scheme. They further argue that Fitzpatrick, who acted as his own legal counsel, repeatedly violated the court’s instructions on examining witnesses and addressing jurors.
“Many of defendant’s closing arguments were blatant attempts to encourage individual jurors to render a decision, or to refuse to render a decision, based on sympathy or a mutual disagreement with the tax laws,” Kathryn Keneally, assistant U.S. attorney general, said in a sentencing memo.
Fitzpatrick’s case has become something of a cause célébre among bloggers who have also tangled with the IRS.
“He was steamrolled into a conviction of a law that wasn’t disclosed or doesn’t exist,” Walter Allen Thompson said in a post on his Very Dumb Government blog.