WASHINGTON - Timothy Smith, a resident of Cullman, Ala., pleaded guilty today in federal court in Birmingham to one count of tax evasion, the Justice Department and Internal Revenue Service (IRS) announced. Smith, the owner of College Tire in Hanceville, Ala., was scheduled to begin trial before Judge R. David Proctor on April 21, 2009.
Smith was indicted in September 2008 and charged with two counts of tax evasion relative to tax years 2002 and 2003.
According to the indictment, plea agreement and other court records, Smith diverted customer receipts from his tire business into two personal bank accounts. Smith also used, or directed others to use, cash and cashiers’ checks to make substantial principal payments on the mortgage for his vacation home in North Carolina and his vacation home in Pensacola, Fla. In total, Smith diverted more than $430,000 from his tire business to his personal bank accounts and his mortgages. In approximately August 2003, he also purchased a real estate lot in North Carolina near his vacation home with $68,100 in cash.
According to court records, Smith concealed the funds that were diverted to his personal accounts and his mortgages from his bookkeeper, who prepared both Smith’s business tax returns as well as Smith’s joint personal tax returns. Smith also took substantial fraudulent tax deductions in relation to a purported farm at his personal residence. As a result, Smith filed false personal and business tax returns for tax years 2000 through 2003. The tax loss resulting from Smith’s scheme was more than $400,000.
As part of his plea agreement, Smith agreed to a binding sentence of 30 months in prison and agreed to pay $170,380 in restitution to the IRS, including a lump sum payment of $50,000 to be paid prior to sentencing. As part of the plea agreement, the government agreed to dismiss tax charges against Smith’s wife, Lori Ann Smith.
Acting Assistant Attorney General John A. DiCicco of the Justice Department’s Tax Division thanked the special agents from IRS-Criminal Investigation who investigated the case, as well as Tax Division trial attorneys Jed M. Silversmith and Matthew J. Mueller, and Assistant U.S. Attorney Michael Whisonant, who are prosecuting the case.
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09-363