Diane L. Kroupa, Conspiring to Defraud IRS, Plymouth MN, 2023

Former United States Tax Court Judge DIANE L. KROUPA, 61, of Plymouth, Minnesota, pleaded guilty today to conspiring to defraud the Internal Revenue Service of $450,000 in taxes, marking a stunning fall from grace for a woman sworn to uphold federal tax law. Kroupa, appointed to the Tax Court in 2003 for a 15-year term, admitted in U.S. District Court in St. Paul to orchestrating a decade-long tax evasion scheme alongside her husband, lobbyist Robert E. Fackler, by disguising lavish personal spending as legitimate business expenses.

According to court documents and her sworn testimony, from 2002 to 2012, Kroupa and Fackler systematically falsified their joint tax returns by funneling over half a million dollars in personal costs through Fackler’s consulting firm, Grassroots Consulting. Expenses included rent and utilities for a second home in Easton, Maryland, where Kroupa lived while serving in Washington, D.C., as well as spas, jewelry, wine clubs, Chinese tutoring, music lessons, and vacations to destinations like Thailand, Greece, and Australia—all falsely claimed as deductible business costs on Schedule C filings.

Kroupa didn’t just sign off on the fraud—she was hands-on. She compiled personal expenses and reclassified them under fake business categories, then sent the falsified summaries to Fackler or directly to their tax preparer. In some instances, she personally submitted the bogus records, ensuring the IRS was misled year after year. The scheme allowed the couple to fraudulently deduct at least $500,000 in personal costs between 2004 and 2010 alone.

But the deception went further. Kroupa failed to report $44,520 from a 2010 land sale in South Dakota and falsely claimed financial insolvency to dodge taxes on $33,031 in canceled debt income. When the IRS launched audits for the 2004 and 2005 tax years, Kroupa and Fackler actively concealed documents from both their preparer and a federal tax compliance officer. During a second audit in 2012, they escalated the fraud by submitting forged and misleading records to an IRS employee in a brazen attempt to obstruct the investigation.

“Abusing her position of public trust, Diane Kroupa conspired to defraud the government and break the very tax laws she was sworn to uphold,” said United States Attorney Andrew M. Luger. “My Office remains committed to prosecuting individuals who engage in fraud schemes such as this, regardless of their position or profession.” The message was clear: no badge, robe, or title shields you from accountability.

“Those charged with upholding the laws are not above the law,” declared Shea Jones, Special Agent in Charge of the IRS St. Paul Field Office. “While serving as a United States Tax Court Judge, Diane Kroupa conspired to break the law by evading the taxes she owed. Her actions were not only unlawful and dishonest, but they were a theft from the American public.” Sentencing is pending. Kroupa faces federal prison, fines, and lifelong disgrace for betraying the bench and the taxpayers she was meant to serve.