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Former Gary councilwoman admits evading taxes under questioning from fed judge

Krusas

Krusas

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Updated: April 18, 2013 11:30PM



It took some pointed questioning from U.S. District Court Judge Joseph Van Bokkelen, but former Gary Common Councilwoman Marilyn Krusas pleaded guilty to hiding a $232,000 inheritance to avoid paying taxes and more than $157,000 in IRS penalties at a Thursday morning hearing at the U.S. District Courthouse in Hammond.

Krusas was charged with one count of tax evasion in October 2012. She initially plead not guilty, but she reached a plea agreement with the government in late March. The government alleged that Krusas had not filed a federal income tax return since 1991, and the government has assessed her four times since 1997 for a total of $157,413 and garnished her wages as a Gary councilwoman.

Krusas, 69, resigned her post on the council on Wednesday, her lawyer, Scott King, told the court. Tax evasion is a felony, which doesn’t allow her to hold public office.

At the change of plea hearing, Krusas and King told Van Bokkelen that she owned money to many creditors, but at first she claimed that her intention wasn’t specifically to evade the IRS.

“We have to determine a factual basis for this plea,” Van Bokkelen said. “You can’t plead guilty just because you want to plead guilty.”

King said his client used the inheritance to pay off her mortgage, give her sister $50,000 in cashier’s checks and make out $60,000 in cashier’s checks to herself. King said she sent the checks to her sister in $9,500 increments, so her sister wouldn’t have to pay gift taxes. Van Bokkelen said the amount caught his eye because checks in the amount of $10,000 or greater must be reported by banks to the IRS.

Assistant U.S. Attorney Gary Bell said that unless Krusas admitted that part of her intent was to evade the IRS, then he would request a trial date.

Krusas’ sentencing is scheduled for 10:30 a.m. on July 11. She could face up to five years in prison, a $250,000 fine and three years probation, although federal prosecutors recommended a sentence reduction because she has admitted her guilt. She also will pay restitution to the IRS, starting with $60,000 that King has been holding in trust for his client.

Krusas didn’t want to comment after the hearing, but King reiterated his belief that Krusas’ crime didn’t have anything to do with her public office. He mentioned that she has suffered from depression, but she has only recently started treatment.

“Unfortunately, when she was charged, she was lumped in with other defendants who used their positions to break the law,” King said. “This is as much a product of an untreated illness. She’s been my councilperson and I worked with her when I was mayor, and she is a person of integrity.”



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