Convicted tax-evading Spokane CPA seeks relief from federal prosecutors
After pleading guilty in 2016 to filing false tax returns for his businesses, a Spokane certified public accountant was back in federal court Monday arguing about the $400,000 in restitution that he agreed to pay and against a request by government attorneys to interview him under oath about the extent of his business dealings.
Roger A. Stadtmueller has served his 15-month sentence after pleading guilty to three counts of filing false corporate income tax returns when he understated his income by roughly $1.9 million from 2006 to 2008.
But legal arguments persist on whether Stadtmueller will have to pay the full amount of restitution as attorneys wait for the Internal Revenue Service to determine if he owes less for back taxes than the $400,000 all parties agreed to in the plea agreement.
Stadtmueller hid some of the income from his businesses, Stadtmueller and Associates and Zazz Inc., according to court records. He had been charging clients $5,000 each to perform audits necessary to qualify for mortgages backed by the Federal Housing Administration. But he also has business dealings in Arizona and Texas.
According to bankruptcy records, Stadtmueller reported earnings of $550,000 in 2016, which includes some of his time in federal prison.
“What we are looking for is access to information,” Assistant U.S. Attorney Brian Donovan said. “It’s easy if they are a single-wage earner. Mr. Stadtmueller has multiple business associations across state lines. He has a house that is for sale. What’s going on with these other assets?”
But U.S. District Judge Rosanna Malouf Peterson wasn’t in the giving mood. Peterson said it appeared to her that federal prosecutors were “swooping in and requiring information under oath. This seems premature to me,” she said.
Peterson asked why the IRS had no representative at the hearing.
“I’m concerned about putting anyone under oath with the DOJ … when there is authority already granted to the IRS to make those determinations,” she said.
Defense attorney Mark Vovos argued that the government already has the financial information it needs based on the the 2017 bankruptcy that Stadtmueller filed. It listed both assets and liabilities of between $1 million and $10 million.
“I don’t know what else Mr. Stadtmueller could have done. He served his time honorably. This is kind of a sock in the head,” Vovos said. “We’d like to put an end to it, so this just doesn’t keep hanging on and put him out of business.”
As part of the original case, Stadtmueller wrote an email in 2007 that was recovered by investigators. It read: “This year I will clear $1,000,000. I have every toy in the box anyone would want.”
According to bankruptcy records, Stadtmueller recently sold a 2001 Corvette, a 2008 Fatboy Harley-Davidson motorcycle and lost insurance coverage on four Ski Doo snowmobiles.
But federal prosecutors placed a lien on the biggest asset, Stadtmueller’s 6,467-square-foot home on Five Mile Prairie. The house, which has six bedrooms and six bathrooms, is listed for sale for $1.6 million.
“If I were him, I’d get out from under this obligation even if it meant selling his house,” Peterson said.
Through his attorney, Stadtmueller said he only has $200,000 to $300,000 in equity in the home after all the liens. The house was valued at $1.2 million in 2016.
Peterson asked Vovos if his client really does not know how much income he brings in every month.
“His business is being built up and it’s going to increase,” Vovos said in reply.
The judge said she would agree to allow prosecutors to submit written questions to Stadtmueller. But she stayed the proceedings for 90 days to allow the IRS to determine a final figure of what he owes for back taxes in the three criminal charges for which Stadtmueller pleaded guilty.
Moving money and hiding it from the IRS “is not something I want to reward,” Peterson said. “I agree the law does allow the government far-reaching opportunities to collect an unpaid debt. But it’s unclear to me that there is an unpaid debt.”