Thomas J. Ernst, Tax Evasion, Virginia 2005

Thomas J. Ernst, a former resident of McLean and Arlington, Va., has pleaded guilty to one count of corruptly endeavoring to impede and impair the Internal Revenue Service (IRS) and one count of tax evasion for 2005, according to a recent indictment.

According to the plea agreement, the tax loss exceeds $2.5 million.

Between 2000 and 2006, Ernst served as the president and chief executive officer of Medicure Plus Inc., a health insurance benefits administration company based in Northern Virginia. Medicure operated as a third-party administrator of the Postmasters' Benefits Plan (PBP), the health benefits carrier for the National League of Postmasters (NLP). Medicure and NLP entered into a 10-year guaranty agreement under which Medicure managed PBP's operations; NLP paid Medicure $166,000 each month plus a $33,000 administrative fee.

The investigation revealed that Ernst used Medicure's corporate bank account to make payments for his personal expenses, including a summer rental house and various property purchases and rentals. Ernst also used nominee bank accounts and purchased and leased assets in the names of his sons and sister-in-law to conceal his income and ownership of assets from the IRS. Additionally, Ernst caused Medicure to fail to file corporate income tax returns, despite earning more than $11 million in gross income between 2001 and 2006.

Ernst also admitted to failing to file a U.S. Income Tax Return, Form 1040 with the IRS, despite the fact that he was required to do so by law. In 2005, Ernst received taxable income of at least $915,678, upon which a substantial tax was due and owing. Ernst used nominee bank accounts and his family members to conceal his income from the IRS.

Ernst faces up to three years in prison and a $250,000 fine for the corruptly endeavoring to impede and impair the IRS conviction and up to five years in prison and a $250,000 for the tax evasion conviction. U.S. District Court Judge Claude M. Hilton of the Eastern District of Virginia scheduled sentencing for December 16, 2011.

Source: https://www.justice.gov/archives/opa/pr/former-northern-virginia-resident-pleads-guilty-tax-evasion-and-impeding-internal-revenue