Businessman Carlow pleads guilty to obstructing IRS over $6.4 million in taxes

Share with others:

Print Email Read Later

Michael P. Carlow, who served six years in prison for masterminding a $31 million check-kiting scheme that victimized PNC Bank, today pleaded guilty to obstructing IRS efforts to collect about $6.4 million in unpaid taxes after the government agreed to drop more serious charges against him.

Mr. Carlow, 61, entered his plea during a 40-minute hearing before U.S. District Court Judge David S. Cercone.

As part of the plea agreement, new federal prosecutors assigned to the case agreed to dismiss charges brought against Mr. Carlow in a six-count federal indictment filed in April 2011.

Those charges, based on much of the evidence prosecutors cited in justifying the obstruction charge, could have put Mr. Carlow in prison for as long as 22 years. He faces a maximum sentence of three years for pleading guilty to a lesser charge.

Judge Cercone honored Mr. Carlow's request not to be sentenced before October, setting the sentencing hearing for Oct. 4. Prosecutors did not object to the delay.

The plea agreement comes after Mr. Carlow sought to have the indictment dropped because of a conflict over a former white-collar defense attorney who took a job as a federal prosecutor in Pittsburgh and was assigned to Mr. Carlow's case.

"It's a far cry from putting him in jail for the rest of his life," said Martin A. Dietz, one of Mr. Carlow's attorneys. "It's pretty clear the government made a pretty big concession in this case."

Jeffrey A. McLellan, one of the federal prosecutors present at today's hearing, declined to comment on why the government agreed to accept a plea on a lesser charge.

A court document prosecutors filed late Wednesday accused Mr. Carlow of obstructing IRS efforts to collect federal income and payroll taxes, interest and penalties he owed dating back to 1990 and of concealing income and assets from the IRS. It said Mr. Carlow underreported his income on federal tax returns for 2003 through 2006.

According to the document, Mr. Carlow diverted income he earned at a series of companies he formed to his long-time girl friend, Elizabeth Jones of Upper St. Clair.

Ms. Jones was also indicted in April 2011 for conspiracy and two counts of filing false tax returns.

She pled guilty to the conspiracy charge in August 2011 and faces up to a five-year prison sentence. Ms. Jones has not been sentenced and remains free on $25,000 bond.

Mr. Carlow also has been free on bond since his indictment. Judge Cercone continued terms of the bond at today's hearing.

Prosecutors said Mr. Carlow failed in 2004, 2005 and 2007 to disclose that he was a president of Marie Corp., a company named after his mother; that he owned Endura Corp., which had interests in oil and gas leases in Stark County, Ohio; and income from a string of businesses he started after being released from prison in 2002.

The businesses failed a short time after Mr. Carlow took control, leaving a string of unpaid bills reminiscent of the damage done at companies Mr. Carlow owned prior pleading guilty to bank and tax fraud charges in 1996.

The $6.4 million in unpaid taxes cited by prosecutors relates to Mr. Carlow's enterprises from the 1990s, ventures that included Pittsburgh Brewing, Clark bar maker D.L. Clark, and City Pride Bakery.

In June, Mr. Carlow sought to have everyone in the office of U.S. Attorney David Hickton, the federal prosecutor in Pittsburgh, disqualified because Mr. Hickton had assigned Tonya Goodman to his case.

Ms. Goodman joined the office this year after previously working at Reed Smith, one of the firms Mr. Carlow interviewed when he was seeking a defense attorney. He did not hire the firm.

Mr. Carlow argued that Ms. Goodman sat in on discussions he had with Reed Smith partner Efrem Grail and could use anything she learned about his case against him as a federal prosecutor.

In a Nov. 21 court filing, federal attorneys said Mr. Carlow has handwritten notes Ms. Goodman made during one of those meetings.

Ms. Goodman was assigned to Mr. Carlow's case May 29 and withdrew June 15.

Mr. Hickton later excused his entire office from handling the prosecution and the case against Mr. Carlow was turned over the prosecutors from the U.S. Justice Department's tax division, who negotiated terms of the plea agreement with Mr. Carlow's attorneys, Mr. Dietz and Tina O. Miller.

Despite that change, Mr. Carlow asked the court to dismiss all of the charges against him, alleging Ms. Goodman's involvement violated his rights.

A hearing on his request had been postponed because of disputes between Mr. Carlow's attorneys and federal prosecutors over the exchange of documents.

mobilehome - neigh_city - breaking - region - businessnews

Len Boselovic: or 412-263-1941.


Create a free PG account.
Already have an account?