Casper Couple Sentenced For Tax Evasion, Money Laundering
A Casper husband and wife were sentenced on Friday to what the federal judge said were lenient punishments for their felonies related to bankruptcy fraud that involved hiding $374,970 from the Internal Revenue Service.
U.S. District Court Judge Scott Skavdahl said he departed downward in federal sentencing guidelines for James Edward Knight II's one count of tax evasion to a sentence of three months in prison and nine months of home confinement from a possible sentence of up to two years imprisonment.
Knight must comply with the terms of three years of probation, or else he'll be back in court, Skavdahl said. "I will remember this day; please don't make me regret it."
Likewise, for Ashley Knight's conviction of two counts of money laundering, Skavdahl departed downward from a possible two-and-a-half year prison term to two concurrent one-month prison terms and two years of probation.
While James Knight held most of the assets, she was in charge of the bookkeeping and knew what she was doing was wrong, Skavdahl said.
Ashley Knight is now living separately from her husband and is starting over a new life with very little, but she, too, needed to follow the terms of probation, Skavdahl said. "Miss Knight, you've received a significant break on this matter.... Good luck."
The judge also ordered both of them to pay $374,970 plus any penalties and interest to the Internal Revenue Service.
They pleaded guilty to the crimes in March.
During the sometimes emotional hearing, the Knights were accompanied by numerous friends and family members including Knight's father who asked for probation.
Despite that plea, Skavdahl said both cases warranted incarceration as a deterrent to serve as a warning to others who consider defrauding the federal government and lying on their bankruptcy filings.
The case began when the Knights began falling behind in paying their taxes in 2006, and those debts began snowballing, Assistant U.S. Attorney Stephanie Hambrick told the court Friday.
The July 20, 2017, indictment stated the Knights formed the Ikon Welding company in 2010 and dissolved it three years later. In April 2014, James Knight's mother-in-law organized Superior Fabrication, LLC.
In September 2014, they filed a Chapter 7 Bankruptcy Petition, but did not disclose any interest in businesses; James Knight said he was an only employee of Superior Fabrication; the couple said they had no money; and they did not disclose certain items of personal property.
Meanwhile, the IRS determined James Knight's total unpaid tax liability was $285,810, and determined Ikon Welding's tax debt from October 2011 through June 2012 was $89,160.
Those debts didn't faze them, Hambrick said. "They were living what can only be described as a lavish lifestyle."
They bought a boat, cars, and took a vacation in Las Vegas while not paying basic bills, Hambrick said. "This is a pattern of behavior over a lengthy time."
James Knight's attorney Tracy Hucke didn't disagree with Hambrick, saying he wasn't good with managing money.
Knight told Skavdahl that he's worked hard, tried to pay his employees first, and thought he could pay off the debts.
When handing down the sentence, Skavdahl complimented his work ethic, but said he's spontaneous with buying big toys and being self-consumed. "You said, '(this case) is humiliating to me,'" Skavdahl said.
The judge remarked that Knight said "me," and didn't refer to the pain it caused other people, nor did it acknowledge the effect on the taxpayers.
"This is a serious offense," Skavdahl said.
People may think shortchanging the government is okay while driving on public roads and using utilities. People who don't pay their taxes put that burden on others, he said.
"The government doesn't operate for free."