DENVER – Donald Dale Smith, age 67, of Fort Collins, Colorado, pled guilty today before U.S. Magistrate Judge Michael E. Hegarty to two counts of willful failure to file a tax return, United States Attorney John Walsh and IRS Criminal Investigation Acting Special Agent in Charge Steven Osborne announced. Judge Hegarty is scheduled to sentence Smith on January 19, 2016 at 10:00 a.m. Smith was charged by an Information in Denver on April 8, 2015.
According to the Information and the stipulated facts contained in the plea agreement, in late 2005, Smith became the owner/operator of Mountain West Children’s Academy, LLC (“MWCA”), a daycare center in Ft. Collins, Colorado. Smith had previously worked as a construction contractor. MWCA operated under Smith from September 2005 through June 2011. Smith was the only owner and operator of the business throughout the relevant tax years.
During the calendar years 2008 through 2010, MWCA was a profitable business and bank records reflect gross business deposits of $447,871 (2008), $439,182 (2009) and $442,169 (2010). As a result of his ownership of and draws from MWCA, Smith had a gross income for each of the calendar years 2008 through 2010 that required him to file personal federal income tax return with the IRS for each of those years. Specifically, Smith had gross income for each of the years as follows: $117,893 (2008), $110,770 (2009), and $134,138 (2010). As a result of Smith’s income, he had federal income taxes due and owing for years 2008 through 2010 in the total amount of $117,954.
In June 2013, IRS conducted an examination of Smith’s tax situation. From 2008 through 2010, Smith used money from the daycare business for gambling at casinos in Blackhawk, substantial country club and golf-related expenses, and cigars. Specifically, between January 1, 2008 and December 31, 2010, Smith spent a total of $110,500 for these expenditures.
Smith pled to two counts of willful failure to file a tax return, which each carries a penalty of not more than 1 year in federal prison, and a fine of up to $25,000.
This case was investigated by Internal Revenue Service – Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Patricia Davies.