Convicted Tax Cheat Sentenced to 51 Months

Hammond, Indiana – United States Attorney David Capp announced that Steven Borchert, 53, of rural Warren County, Indiana, was sentenced to 51 months of imprisonment and 1 year of supervised release after being found guilty of filing nine false income tax returns for the years 2001 – 2009.

Borchert, who operated a carpet cleaning business in West Lafayette, generated over $1.8 million in gross revenue during the years in question, which should have been reported on his tax returns. However, Borchert maintained that only income received directly from the federal government was taxable and that his private income did not constitute reportable income.

According to court records, Borchert filed bogus tax returns and reported ‘zero income.’ His arguments were categorically rejected by the district court and the jury. Borchert’s assertions were based, in part, on the website LostHorizons and a book called ‘Cracking the Code’ written by Peter Hendrickson. Both the website and book encouraged people to file ‘zero income’ tax returns because the Internal Revenue Code only applied to a very small group of people.

Some of the theories included that wages and business activity are not income under the Code. The website and book fail to mention that Hendrickson has been twice convicted for federal tax offenses. Hendrickson’s most recent conviction was for filing ‘zero income’ tax returns, the same conduct for which Borchert was convicted.

United States Attorney Capp stated, ‘The Borchert conviction should serve as fair warning to any other persons who subscribe to this ‘zero income’ argument. The United States Attorney’s Office, in conjunction with the Internal Revenue Service, will continue to vigorously investigate and prosecute those who file these bogus tax returns.’

This case was the result of an investigation by the Internal Revenue Service and was prosecuted by Assistant United States Attorney Gary Bell.

In related news, Peter Hendrickson has been convicted twice for federal tax offenses, including filing ‘zero income’ tax returns. His most recent conviction was for the same conduct that Borchert was convicted of.

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