Hotel Manager and Owner Both Plead Guilty in Tax Investigation

9 months ago
AMERICA NEWS NOW

A former Clare, Michigan, hotel manager pleaded guilty today to filing a false tax return. His father, the owner of the hotel, also pleaded guilty to witness tampering in an effort to obstruct the grand jury’s investigation of his son.

According to court documents, Harold Walls, 58, managed the day-to-day operations of a Clare hotel, which his father, Karl Walls, 86, owned. Harold Walls did not report to the IRS any of the income he received from working at the hotel from 2013 through 2017. Rather than pay himself wages directly through the hotel’s payroll system, Harold Walls paid himself by other means, including by writing checks to himself from the hotel operating account and using a hotel bank account to pay for personal expenses.

Harold Walls also provided false and incomplete information to the hotel’s tax return preparer for 2012 through 2017, resulting in the hotel’s business income being understated. Specifically, Harold Walls did not disclose to the tax return preparer that the hotel had 11 “off-book” rooms that were not tracked in the hotel’s reservation system. Harold Walls also provided the return preparer documents that overstated the amount of property taxes the hotel had paid to the City of Clare.

After the IRS began its investigation, Harold Walls obstructed the investigation by instructing a hotel employee to make false statements to the IRS about the nature and extent of his work at the hotel. He also denied to IRS special agents that he was employed at the hotel.

Karl Walls also obstructed the investigation of his son by directing two witnesses to lie to the grand jury. In October 2018, two days before a former hotel employee was scheduled to provide grand jury testimony, Karl Walls instructed the employee to testify that Harold Walls did not work at the hotel. Karl Walls also attempted to convince his tax return preparer to make a similar false statement to the grand jury about his son’s employment status.

Both sentencings are scheduled for a later date. Harold Walls faces a maximum penalty of three years in prison for filing a false tax return, and Karl Walls faces a maximum penalty of 20 years in prison for witness tampering. Both men also face a period of supervised release, restitution and monetary penalties. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors. 

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement and thanked the U.S. Attorney’s Office for the Eastern District of Michigan for providing substantial assistance in this matter.

IRS-Criminal Investigation is investigating the case.

Trial Attorneys Melissa S. Siskind and Sam Bean of the Tax Division are prosecuting the case.

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