Judge delays sentencing for Michael Carlow on obstruction charge

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A federal judge has delayed sentencing for Michael P. Carlow, who pleaded guilty this year to a tax charge after serving six years in prison for masterminding a $31 million check-kiting scheme that victimized PNC Bank.

The delay was caused by a dispute over the amount of taxes Mr. Carlow owes to the federal government.

U.S. District Judge David S. Cercone last week rescheduled sentencing for Mr. Carlow, 62, and his longtime companion, Elizabeth G. Jones of Upper St. Clair, for Nov. 15.

Both were supposed to be sentenced Sept. 10 after pleading guilty to charges stemming from Mr. Carlow's attempts to thwart the IRS's efforts to collect overdue taxes, penalties and interest. That included Mr. Carlow concealing assets and income by diverting it to Ms. Jones and a number of companies he formed after being released from prison in 2002, prosecutors said.

Attorneys for Mr. Carlow had asked the judge to delay sentencing because the government had not provided an estimate of the tax loss that it wants his prison sentence to be based on. They also asked the judge to compel prosecutors to state what they think the tax loss is, arguing they cannot challenge the government's figure unless they know what it is.

In a court filing the same day, federal prosecutors said the IRS has determined Mr. Carlow owes more than $6 million in back taxes, penalties and interest for 1992 through 1996, when he pleaded guilty to bank and tax fraud charges stemming from the check-kiting scheme.

The prosecutors told the court they gave Mr. Carlow information about taxes he owes for 2003 through 2006. They also disclosed they have told him that if he wants to qualify for a plan to repay the taxes over time, he should file tax returns for 2007 through 2011.

Mr. Carlow and Ms. Jones were indicted in April 2011. The indictment alleged Mr. Carlow underreported income from companies he owned after leaving prison and that he failed to report assets and income he was required to disclose to federal authorities as part of his 1996 plea agreement. Ms. Jones was charged with conspiracy and two counts of filing false tax returns.

The six charges against Mr. Carlow were dismissed in January after he sought to have the indictment thrown out because a former white-collar defense attorney who took part in preliminary discussions about representing him later took a job as a federal prosecutor in Pittsburgh and was assigned to his case.

The original charges could have put him in prison for up to 22 years. The obstruction charge he pleaded guilty to in January carries a maximum sentence of three years and up to a $250,000 fine.

Ms. Jones pleaded guilty to the conspiracy charge in August 2011 and faces up to a five year-prison sentence.

Both have been free on bond since being arrested following the April 2011 indictment.

businessnews

Len Boselovic: lboselovic@post-gazette.com or 412-263-1941.


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