PLYMOUTH, Minn. – A former tax court judge at both the state and federal levels, along with her husband, were convicted of tax crimes of their own Thursday.
Former judge Diane Kroupa and her husband Robert Fackler illicitly listed a number of large expenses as business expenses. From 2004 to 2010 this resulted in the couple understating their taxable income by about $1 million, and the total amount of taxes they owed by about $450,000.
“Diane Kroupa held a position of public trust as a federal tax court judge and made rulings based on the very tax laws she broke. She broke that trust when she thought she was above the law and committed the same crimes as those who appeared before her in court over the past decade,” Hubbard Burgess, Acting Special Agent in charge of the IRS’ criminal investigation said in a statement. “Everyone in society must play by the same rules and IRS-CI will protect the integrity of the tax system by ensuring everyone pays their fair share, including federal officials.”
Kroupa served as chief judge on the Minnesota tax court before being appointed to the U.S. Tax Court in June 2003. The appointment was for a 15 year term, but she retired in 2014. Fackler was a self-employed lobbyist and political consultant. He owned and operated the lobbying firm Grassroots Consulting. The couple owned a home in Plymouth, Minnesota and rented a second residence in Easton, Maryland where Kroupa worked while serving on the U.S. Tax Court.
In filing their joint income taxes, Kroupa and Fackler inappropriately listed numerous items as business expenses for Grassroots Consulting. This included rent and utilities on the Maryland home, expenses for the Minnesota home, spa and massage fees, wine club fees, personal computers, Chinese language classes, and vacations to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico, and Thailand.
Kroupa and Fackler also failed to report income from a land sale in South Dakota, and falsely claimed financial insolvency in order to avoid paying taxes on $33,031 on cancellations of debt income.
Kroupa was sentenced to 34 months in prison, while Fackler received two years. Both of them entered guilty pleas prior to sentencing.