Contact:
Donald A. Davis
Assistant United States Attorney
(616) 456-2404

FOR IMMEDIATE RELEASE

Grand Rapids, Michigan – June 17, 2004 – United States Attorney Margaret M. Chiara and Special Agent in Charge, Internal Revenue Service Criminal Investigation, Mark Kroczynski, announced that, on June 15, 2004, John F. Napieralski, 57, of Cedar Springs, Michigan, pleaded guilty to the four counts of tax evasion for the tax years 1997 through 2000, as charged in an April 14, 2004 indictment.

During a court status hearing, the day before a jury was to be selected in his trial, Mr. Napieralski stated to United States District Court Judge Richard Alan Enslen that he was guilty of all charges. Mr. Napieralski admitted that he provided accounting services to Sto-Ex, Inc., Kentwood, Michigan, since the 1990s. Mr. Napieralski also associated with various "tax protestors" who also have been convicted of tax crimes in the Western District of Michigan, including Orval Dean Russell, Michael John Modena, and Barrie Leslie Konicov. In 1994, Mr. Napieralski created a sham trust called "The Educational Systems Trust" (TEST). He caused a checking account to be opened at National City Bank, formerly First of America Bank, and a post office box in Rockford, Michigan, with the help of Mr. Russell, Mr. Modena and others. In a 1994 letter to the Internal Revenue Service, he claimed not to be a United States citizen for "internal" revenue purposes.

Mr. Napieralski also admitted that he instructed Sto-Ex, Inc., that all future payments for his services should be made payable to TEST. He agreed that, during 1997 through 2003, over $950,000 was deposited into TEST's bank account, with over $600,000 in income coming from Sto-Ex, Inc. He also acknowledged that, in 1998, he submitted a document in an attempt to quash an Internal Revenue Service summons in which he claimed not to be a citizen of the United States, nor a resident of the state in which he inhabits, and that he was not a "person" or "United States person." Mr. Napieralski admitted that he willfully attempted to evade and defeat a substantial portion of his income tax due and owing by failing to file tax returns reporting his business gross income received from Sto-Ex, Inc., coupled with affirmative acts of evasion. In a 1994 letter to Barrie Leslie Konicov, Mr. Napieralski stated, “We can create a lot of havoc for the IRS” and that he, “Was willing to do whatever it takes to win a paper war.”

Mr. Kroczynski stated, "Mr. Napieralski knowingly acted on a blatantly fraudulent anti-tax position. He tried to twist the law to his advantage and now he must face a costly detour in his life. Courts have consistently and unanimously held that these anti-tax defenses are frivolous and baseless arguments. IRS Criminal Investigation stands committed to ensuring that everyone pays their fair share of taxes."
Willfully attempting to evade and defeat payment of income tax due and owing is in violation of Title 26, United States Code, Section 7201. Each count of conviction carries a maximum penalty of five-years imprisonment and a $250,000 fine.

Ms. Chiara commended the agents of the Internal Revenue Service Criminal Investigation for their work in this investigation. Assistant United States Attorney Donald A. Davis is prosecuting the case on behalf of the United States.