October 21, 10

NEWS / Massachusetts Businessman Pleads Guilty to Multiple Frauds and Tax Evasion Over More Than a Decade

WASHINGTON - A former Pittsfield, Mass., man pleaded guilty today in federal court in Boston to his role in a series of frauds and attempts to avoid paying taxes over more than a decade, as well as lying to federal authorities and financial institutions about his illegal activities.

The guilty plea was announced by U.S. Attorney Carmen M. Ortiz for the District of Massachusetts; Assistant Attorney General Lanny A. Breuer of the Criminal Division; William P. Offord, Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI) - Boston Field Office; 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; and Richard DesLauriers, Special Agent in Charge of the FBI’s Boston Field Office.

Michael J. Armitage, 56, pleaded guilty today before U.S. District Court Judge Michael A. Ponsor 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 information presented to the court, 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 Armitage 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. According to information presented at the plea hearing, 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. 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 which 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 tried to avoid paying taxes that had been previously assessed for three separate years: 1995, 1996 and 1998. According to court documents, Armitage’s efforts to avoid paying taxes for these years included withholding material information from his tax representative; directing 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; making materially false statements to an IRS Revenue Officer; purposely withdrawing funds recently deposited in his bank account to maintain a low account balance; diverting 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; and using 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, according to information presented to the court, from Nov. 30, 2004, through at least July 5, 2006, Armitage conspired with others to defraud the Federal Transportation Administration by submitting 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. These invoices falsely claimed that the Federal Transportation Administration’s share of the project costs did not exceed the maximum 50 percent, as well as sought reimbursement for fictitious, inflated or ineligible expenses, and/or falsely claimed that certain milestone achievements warranted payment of claimed expenses. According to court documents, Armitage and others received $703,097 to which they were not entitled, and they used this money for their own benefit as well as the benefit of another company that Armitage and a co-conspirator 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.

Judge Ponsor scheduled sentencing for Apr. 7, 2011. Armitage faces a maximum penalty of 30 years in prison and a $1 million fine on each count of false statements to a federally insured financial institution. He faces a maximum fine of five years in prison and a $250,000 fine for each of the remaining counts to which he pleaded guilty.

The case is being prosecuted by Assistant U.S. Attorney Steven H. Breslow of U.S. Attorney’s Springfield Branch Office, as well as Senior Litigation Counsel William M. Welch II and Trial Attorney Kevin Driscoll of the Criminal Division’s Public Integrity Section. The case is being investigated by IRS-CI, the DOT-OIG and the FBI, with assistance from the Defense Contract Audit Agency.

http://www.justice.gov/opa/pr/2010/October/10-crm-1176.html

Tags: document, branch office, criminal investigation,