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Wednesday, February 25, 2015

"BEFORE THE MEDIA GETS AHOLD OF THIS": Steven Ingersoll's Federal Fraud Trial

SECRETS & LIES: NORTHERN MICHIGAN MEDIA MYOPIA

Traverse City Record-Eagle Executive Editor Mike Tyree has one thing right: secrets abound in a Traverse City school. 

The problem is, Tyree's been barking up the wrong tree. 

Here's Part 1 of my report on Tuesday's session of Steven Ingersoll's federal fraud trial: ROY AND TAMMY BRADLEY MADE HOW MUCH!?

Tuesday’s testimony in Steven Ingersoll’s federal fraud trial began with a whimper—and ended with a bang.

Picking up where he left off from his previous testimony, Independent Bank manager Michael Stodolak wrapped up with an explanation about the unusual banking habits of defendants Roy and Tammy Bradley. Relating how he informed the Bradleys that their method of “handling cash withdrawals a certain” way required more privacy than his branch could provide, Stodolak suggested the Bradley’s take their business to a larger branch.

Under cross examination by Roy Bradley’s attorney, Mark Satawa, Stodolak revealed that Tammy Bradley handled much of the banking on behalf of the account. Stodolak ultimately closed the Bradley account, due to what he termed the couple’s “disorderly” banking habits.

Next on the stand was prosecution witness Cheryl Lupton, the longtime Office Coordinator for Bay City’s Best Real Estate. Lupton, who works with broker Frank Janca, authenticated closing documents for Bay City properties purchased on May 25, 2011 by Steven Ingersoll’s now defunct Front Porch Renaissance: 111 N. Monroe Street, 248 N. Lincoln, 241 N. Farragut and 222 N. Jackson in Bay City.


Under cross-examination by Steven Ingersoll’s criminal defense attorney, Martin E. Crandall, Lupton agreed with Crandall’s statement that the homes were purchased by Ingersoll to “house teachers at the Bay City Academy”. 

H&R "BLOCKHEADS": TAKE THAT $350,000...AND RAISE IT TO $800,000....OH HELL, JUST MAKE IT $2,400,000! THAT'S A NICE, "BIG ROUND NUMBER"!

Former H&R Block tax preparer Sandra Harrington took the stand, testifying that Roy and Tammy Bradley required three revisions on their 2011 income tax return.

Harrington, who no longer works for H&R Block, testified that she had prepared tax returns for Roy and Tammy Bradley for eleven of the fifteen years she worked at the tax service. Primarily working with Tammy Bradley, Harrington testified that in April 2012 the Bradleys had a “change in income” that represented “a lot of money”.


Under direct examination by the prosecution, Harrington authenticated 2009 and 2010 tax returns filed by Roy and Tammy Bradley.

In 2009, the Bradleys had an adjusted gross income of $18,182, based on wages and form Schedule C business income.

The next year, 2010, the couple’s adjusted gross income had risen to $23,618.

However, on the first of three 2011 returns Harrington prepared for the Bradleys in 2012, the income figure provided by Tammy Bradley was $350,000. In early 2011, Steven Ingersoll hired Roy Bradley's construction company, Lasting Impressions, to renovate a former church at 400 N. Madison Avenue, converting it into the Bay City Academy. 


However, Harrington testified on that on April 16, 2012 she created a 2011 tax return for the Bradleys under the business name “Thunder Builders”. The 2011 return showed  “total expenses” of $34,931, with a profit of $315,069. Harrington testified as government prosecutors displayed the documents on large courtroom monitors and smaller juror displays.

On April 17, 2012 (the next day) Harrington testified that both Roy and Tammy Bradley visited her office and instructed her to increase the business income on their Schedule C report from the previous $350,000 to $800,000. Harrington testified that like the earlier amount, the Bradleys provided no documentation supporting the increase. The expense amount remained the same—$34,931—and the revised tax form showed an adjusted profit of $765,069.

Harrington printed copies of the return for the Bradleys to file. 

As a seasonal H&R Block employee, Harrington’s was laid off after tax season. Harrington picked up “side job” with Roy Bradley in the spring or summer of 2012 when she was hired to help Bradley organize the “boxes and bags” of receipts into a summary of expenditures.

Harrington testified that she spent approximately 25 hours organizing the receipts and creating a QuickBooks vendor summary, determining that the Bradleys had spent nearly $1.4 million in business expenses in 2011— nearly $600,000 more than Roy and Tammy Bradley had claimed as income on their April 17 Schedule C form.

The prosecution asked Harrington, during her direct examination, to read select vendor amounts: A Plus Asbestos-$1,200.00; Common Sense Computing-$46,000; Macomb Group-$177,670.

When asked to move down to “L” on the list and read the total under “Labor”, Harrington testified there was no line item for “Labor”. Stating that there was “no receipt” for labor, Harrington revealed she did not include line items unless she had a receipt “in my hand”.

Handwritten notes on the document, shown by the prosecution, revealed that Tammy Bradley instructed Harrington to add “34,843 miles” as the “total mileage” for 2011 for the “dump trucks” and other Bradley construction business vehicles. (Geez, the earth's circumference from pole-to-pole is only 24,000 miles!).


Now here’s where it gets interesting: when faced with the vendor receipt total summary amount, Tammy Bradley instructed Harrington to change their Schedule C income to $2,400,000, she testified.

When asked by a federal prosecutor to describe her reaction to the $2.4 million income phone call with Tammy Bradley, Harrington testified that she “was floored” and was “baffled, since that was a lot of money.”

Harrington admitted that, like the first two amounts, the $2.4 million amount came with no documentation, only verbal direction from Tammy Bradley. And Harrington revealed that the Thunder Builders expense total was increased only after she had completed the vendor expense list for Roy Bradley.

Since Harrington’s seasonal employment with H&R Block had ended, she testified that her former H&R Block supervisor Helen Coryell prepared the amended tax return for the Bradleys in October 2012. Harrington testified that she sat “next to” Coryell in the H&R Block office as she prepared the IRS form 1040X for Roy and Tammy Bradley, which showed a gross income of $2.4 million, expenses of $1,769,245 for a profit of $630,755.  (Coryell later testified that the amended return, dated October 20, 2012 showed that the Bradleys claimed they’d paid $254,275 in taxes but offered no evidence of payment. In addition, the Bradleys claimed a refund of $49,978 for 2011)

The prosecution displayed the document, which showed a contract labor total of $70,000 but no employee wages. Harrington testified that the Bradleys did not withhold taxes or deduct Social Security from their employees.

Cross examination of Harrington by defense attorneys Jan Geht (Steven Ingersoll) and Mark Satawa (Roy Bradley) focused on her qualifications tax preparer and the loss of her H&R Block seasonal employment by  “not reporting the Bradley income revision up the chain of command” and painting the Bradley’s as “blue collar, common folks” who were disorganized and not “on top of things.”

Satawa again brought the defense claim of “government overreach” and “heavy-handedness” into questioning, coupling it with the claim that Roy Bradley “lacked any intention” to fraud and was just in way over his head.

Prosecutor Janet Parker concluded, punching through the “they-were-just-simple-blue-collar folks” attempted defense with a volley of questions to Harrington:

Parker: Did you recommend that the Bradleys not withhold taxes?

Harrington: No.

Parker: Did you recommend the Bradleys not withhold Social Security?

Harrington: No

Parker: Did you recommend the Bradleys not withhold Medicare/Medicaid fees?

Harrington: No.

Parker: Did you recommend the Bradleys not keep any business records?

Harrington: No.

Roy Bradley’s attorney, Mark Satawa, indicated he intended to recall Harrington to testify during the defense case in chief, and would issue the required subpoena.

2 comments:

  1. Why in the world is the Bay City Times NOT covering any of this testimony and presented evidence?

    ReplyDelete