United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

Dallas Businessman Sentenced to Two Years in Prison for Failing to File Income Tax Returns

Defendant Also Paid $1.8 Million Restitution to IRS

John Hayden LaRue, Jr., a Dallas businessman, was sentenced today by U.S. District Judge Sidney A. Fitzwater to 24 months in prison following his guilty plea in October to three counts of failing to file an income tax return, announced U.S. Attorney Richard B. Roper of the Northern District of Texas. As part of his plea agreement with the government, LaRue paid restitution of $1,811,189 to the Internal Revenue Service prior to today’s sentencing. Judge Fitzwater ordered that LaRue surrender to the Bureau of Prisons on April 20, 2007.

LaRue is the owner of Medical Contracting Services, Inc., (MCS) in Dallas. He admitted in court documents that he knew of the requirement to file a federal income tax return and that he voluntarily and intentionally failed to do so. He admitted that he knew MCS was not exempt from tax and that he knew he was therefore required by law to file a tax return for MCS for calendar years 1999, 2000 and 2001, stating specifically the items of MCS’s gross income and the deductions and credits allowed by law.

“Law-abiding taxpayers deserve the assurance that their competitors and neighbors are also filing their tax returns and paying what the law requires. So, rest assured that in Mr. Larue's case, he will pay two-fold: He paid over $1,811,189 to the Internal Revenue Service and he will spend the next two years in a federal jail," said Erick Martinez, Special Agent-in-Charge for IRS Criminal Investigation in Dallas, Texas.

The case was investigated by Internal Revenue Service - Criminal Investigation and prosecuted by Assistant U.S. Attorney Lynn Hastings.

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