LITTLE ROCK — A woman who was rebuffed Friday in her half-hearted attempt to plead guilty to a federal tax crime was more successful on her second attempt Monday.
Angela Hagerty, 39, on Friday refused to admit to knowingly signing false tax returns at her husband's direction, telling U.S. District Judge Susan Webber Wright, "He brought home the tax returns and said, 'sign here,' and that's what I did."
She also told Wright that her attorney, Jason Files, had decided that a plea bargain was "the best way."
But without the woman's outright admission that she knew the returns were false when she signed them, and that she had taken a step to conceal their falsity, Wright wouldn't allow her to plead guilty to a charge of misprision - knowing about a crime and failing to report it.
Hagerty had intended to plead guilty to the reduced charge of misprision, in exchange for her original conspiracy and tax-evasion charges being dismissed, at the same time that her husband, Craig A. Hagerty, 46, negotiated his own guilty plea.
But the judge accepted only Angela Hagerty's husband's plea, in which he admitted running a sophisticated scheme for five years to disguise the Russellville couple's income, short-changing the IRS by about $1.4 million. As a result, six of his eight tax-evasion charges were dropped.
On Monday, Assistant U.S. Attorney Michael Johnson told the judge that Angela Hagerty's hesitancy on Friday stemmed from "some confusion" about whether she was expected to acknowledge the crime in general or to know the precise figures involved.
Files thanked Johnson for sitting down with him and his client for an hour and a half after Friday's hearing to thoroughly explain what Angela Hagerty would be admitting by pleading guilty to misprision.
"I do know that sometimes misprision gives people a hardtime," Wright said.
Johnson described details of the government's allegations against the couple, saying that Craig Hagerty learned his evasion techniques at a June 1999 conference in Chicago that his wife had been opposed to him attending and then "insisted" that the couple use the "Aegis system."
Scams taught by the now defunct Aegis Co. of Chicago have cost taxpayers $60 million nationwide and led to numerous prosecutions, Johnson said.
He described Angela Hagerty as a "passive partner" in the events that followed, including signing over everything the couple owned into business trusts that her husband created overseas to disguise his money as foreign income that wasn't subject to U.S. tax laws.
Craig Hagerty funneled all the assets and his income from his Russellville multi-level marketing business through trusts in Belize, and the couple accessed their money primarily through foreign-issued credit cards and wire transfers from offshore banks, Johnson said.
Even after a federal grand jury in the Eastern District of Arkansas served subpoenas at the Hagertys' house in 2005, they transferred property around to evade paying taxes, Johnson said.
Referring to Angela Hagerty, Johnson said Monday, "I can't say at what point she went from being an innocent bystander to knowing what they were doing was wrong ... [but she] continued to go along with Mr. Hagerty and sign whatever documents he wanted her to sign."
"Is what he said you did substantially correct?" Wright asked.
"It is," Angela Hagerty replied without hesitation.
Wright then agreed to Johnson's request to drop the original charges Angela Hagerty faced in exchange for her admitting to the single, less-serious felony.
A sentencing date hasn't been set for the Hagertys. Craig Hagerty faces up to 10 years in prison, while his wife faces three years at most and may be eligible for probation.
Northwest Arkansas, Pages 12 on 09/29/2009