A Maumelle man who worked as a tax preparer for several central Arkansas businesses was sentenced Thursday to nearly four years in federal prison for submitting false tax forms on behalf of 54 unsuspecting clients to pocket more than $1 million meant to cover payroll taxes.
Christopher T. Craig, 48, pleaded guilty in August to two counts of aiding in the preparation of false tax returns, admitting that he filed 2010 and 2011 tax returns in a way that reduced the amount of taxes owed to the IRS by the taxpayers. However, he collected tax payments from the taxpayers for the correct amount they owed and diverted the difference to himself.
At his sentencing hearing Thursday in the Little Rock courtroom of U.S. District Judge Kristine Baker, about a dozen of his former clients -- mostly owners of small businesses -- showed up to watch.
One of them, Kimberly Carroll, who owns Innovative Concrete Systems, at first was going to let her letter to the court do the talking for her, but she decided to speak up after hearing two defense witnesses describe Craig as a "big-hearted man" who committed fraud only because he got himself into a financial hardship by undercharging his customers.
"We keep hearing he has a big heart, but not one time did he call or say anything to any of his victims," said Carroll, while acknowledging that he was so well-liked that "if he would've come to any of his clients to raise his fees, we wouldn't have had any objection."
She questioned how big his heart was when he later filed for bankruptcy, before being charged with a crime, to keep from having to repay the victims, most of whom are now making payments to the IRS to cover their underpaid payroll taxes from 2009 and 2010.
"I only got took for about $20,000, but to me, that's everything," Carroll said. "I'm having to make monthly payments to the IRS."
In a plea agreement filed in August, Craig agreed to make restitution to the IRS of $1,092,177. Any amount he pays toward the restitution correspondingly will lower the amount the business owners are repaying.
Craig isn't an accountant, but he worked as a tax preparer, focusing on payroll taxes, under the names of TLC Tax Service and See More Business Services, which he operated in Little Rock and North Little Rock.
While each of Craig's charges is punishable by up to three years under federal statutes, federal sentencing guidelines recommended a prison sentence of between 46 months and 57 months because of the amount of money involved.
Assistant U.S. Attorney Tricia Harris asked the judge to consider imposing consecutive sentences on each count to ensure that Craig was sentenced within the guideline range, while not violating the statutory maximum of three years for each count.
"This isn't a one-time mistake," Harris said. "He did this in 2008, and was able to pay back the money taken that belonged to his clients." But then, she said, "he did this again."
"I realize he had financial problems and concerns about paying debts," she said, "but as a tax preparer, he took money that was entrusted to him. A lot of his clients are small-business people, and $2,000 to $10,000 is a lot of money to a small-business person. On top of that, some have even had to pay the IRS directly."
She said the business owners also have had to hire lawyers and accountants and spend time to sort out "this mess they got into through no fault of their own."
Defense attorney Dale Bryan Duke of Little Rock asked the judge to grant a downward variance that would allow Craig to serve a probationary sentence and avoid prison time, noting that he has accepted responsibility, cooperated fully with the IRS and pleaded guilty before he could be indicted by a federal grand jury.
"The most difficult part is having the knowledge that he hurt people," Duke said. "He has really taken that to heart."
A former employee of Craig's and a former business partner testified that Craig's fees were below market rate, which is what got him into a financial bind.
After taking a brief recess to read letters submitted to the court from both supporters and victims of Craig, Baker denied Duke's request for a probationary sentence and sentenced Craig to 24 months in prison on one count and 22 months on the other count, for a total of 46 months -- just two months short of four years.
She also ordered him to pay the $1,092,177 in restitution to the IRS with interest, and she forbade him from disposing of any assets.
Metro on 06/19/2015