Michael Andrew Schlegel, Conspiracy to Defraud, Minnesota 2014

MINNEAPOLIS—Michael Andrew Schlegel, a former executive of a Minnesota-based multi-level marketing company, has been found guilty of conspiracy to defraud the United States, tax evasion, and failing to file federal tax returns.

A federal jury delivered the verdict on March 14, 2014, following a seven-day trial. Schlegel was indicted on April 9, 2013.

According to the indictment and evidence presented at trial, from 2002 through 2010, Schlegel and his co-defendant Bradley Mark Collin conspired with each other and others to defraud the U.S. by obstructing the Internal Revenue Service (“IRS”) in its lawful collection and assessment of individual income taxes.

Schlegel failed to make any payments toward the back taxes, interest and penalties levied against him in 2000, which totaled more than $600,000. Both defendants also failed to file federal individual tax returns for tax years 2002-2009, pursuing “tax protestor” ideologies.

Schlegel controlled NatureRich, Inc., a multi-level marketing company that sold natural and health-related products. He and Collin received wages and commission payments from NatureRich that totaled more than $400,000. Schlegel also caused NatureRich to pay his commissions to a nominee trust called the “Andrew James Living Trust,” from which he then paid his family’s expenses.

The defendants used nominee entities to engage the “warehouse” banking services of Olympic Business Systems and Century Business Concepts. They also filed misleading federal corporate tax returns in the name of NatureRich in an effort to conceal the true extent of their personal interest in and the income derived from NatureRich.

The conspiracy, tax evasion, and failure to file tax returns charges against Schlegel carry a potential maximum penalty of five years in prison on the conspiracy count, five years on each tax evasion count, and one year on each count of failure to file a tax return. U.S. District Judge Patrick J. Schiltz will determine his sentence at a future hearing.

Related Federal Cases