Date: 09-23-2016

Case Style: United States of America v. Robert E. Fackler

Case Number: 0:16-cr-00084-WMW-JSM

Judge: Wilhelmina M. Wright

Court: United States District Court for the District of Minnesota (Hennepin County)

Plaintiff's Attorney: Benjamin F. Langner and Timothy C. Rank

Defendant's Attorney: Thomas E Brever

Description: Minneapolis, MN - Husband Of Former United States Tax Court Judge Pleads Guilty To Obstructing An IRS Audit

Robert E. Fackler, 63, with obstructing an IRS audit. FACKLER, who was indicted on April 4, 2016, pleaded guilty.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER was married to Diane Kroupa, a former judge who was appointed to the United States Tax Court on June 13, 2003 for a term of 15 years. During the same period, FACKLER was a self-employed lobbyist and political consultant who owned and operated a business known as Grassroots Consulting. From 2004 to 2013, FACKLER and Kroupa owned a home in Minnesota. From 2007 to 2013, they also leased a second residence in Maryland, where Kroupa lived while fulfilling her duties as a Tax Court Judge in Washington DC.

According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2002 and 2012, FACKLER and Kroupa conspired to obstruct the Internal Revenue Service (IRS) from accurately determining their joint income taxes. As part of the conspiracy, FACKLER and Kroupa worked together each year to compile numerous personal expenses for inclusion as supposed “business expenses” for Grassroots Consulting in their joint tax return. Those expenses included: rent and utilities for the Maryland home; utilities, upkeep and renovation expenses of the Minnesota home; pilates classes; spa and massage fees; jewelry and personal clothing; wine club fees; Chinese language tutoring; music lessons; personal computers; and expenses for vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand. In total, from 2004 through 2010, the defendants fraudulently deducted at least $500,000 of personal expenses as purported Schedule C business expenses. At times, Kroupa prepared and provided to FACKLER handwritten summaries of personal expenses falsely described according to business expense categories. On other occasions, Kroupa herself compiled and provided to their tax preparer the fraudulent personal expense.

According to the plea agreement and FACKLER’s testimony at the plea hearing, as part of the conspiracy, FACKLER also caused Grassroots Consulting business receipts to be understated by approximately $450,000 by fraudulently deducting purported business expenses which had previously been reimbursed. As a result, the defendants caused the amount of adjusted gross income, taxable income, and total tax shown on their income tax returns to be falsely understated.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa made a series of other false claims on their tax returns, including failing to report approximately $44,520 that Kroupa received from a 2010 land sale in South Dakota. The defendants falsely claimed financial insolvency to avoid paying tax on $33,031 on cancellation of indebtedness income.

According to the plea agreement and FACKLER’s testimony at the plea hearing, FACKLER and Kroupa purposely concealed documents from their tax preparer and an IRS Tax Compliance Officer during an audit for their 2004 and 2005 tax returns.

According to the plea agreement and FACKLER’s testimony at the plea hearing, during a second audit in 2012, FACKLER and Kroupa caused false and misleading documents to be delivered to an IRS employee in order to convince the IRS employee that certain personal expenses were actually business expenses of Grassroots Consulting. After the IRS requested documents pertaining to their tax returns, Kroupa removed certain items from their personal tax files before FACKLER gave them to their tax preparer because the documents could reveal they had illegally deducted numerous personal expenses. FACKLER and Kroupa together concocted “false explanations” justifying payments questioned by the IRS. Later, when they learned the 2012 audit might progress into a criminal investigation, Kroupa instructed FACKLER to lie to the IRS about her involvement in preparing the portion of their tax returns related to Grassroots Consulting.

According to the plea agreement and FACKLER’s testimony at the plea hearing, between 2004 and 2010, FACKLER and Kroupa purposely understated their taxable income by approximately $1,000,000 and purposely understated the amount of tax they owed by at least $450,000.

This case is the result of an investigation conducted by the Criminal Investigation Division of the IRS and the United States Postal Inspection Service.

Assistant U.S. Attorneys Benjamin Langner and Timothy Rank are prosecuting the case.



Defendant Information:

ROBERT E. FACKLER, 63

Minnetonka, Minn.

Convicted:

Obstruction of an IRS audit, 1 count

Outcome: Guilty

Plaintiff's Experts:

Defendant's Experts:

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