Two Morris men indicted on tax charges
Two Morris men have been indicted in federal court on charges of filing false tax returns, conspiracy and attempting to defraud the Internal Revenue Service.
Joseph Edward Riley, 62, Morris, was charged with one count of conspiracy to defraud the IRS and two counts of filing a false tax return. Riley's brother, John Thomas Riley, 60, Morris, was charged with one count of conspiracy, one count of procuring a false tax return and one count of filing a false tax return.
The charges contend that the Rileys conspired to evade tax payments, and that they awarded bonuses and bought property with money not reported to revenue officials.
Phone messages were left for Joseph Riley on Thursday and Friday but the Sun Tribune was unable to reach him for comment.
He was quoted in a Minneapolis Star Tribune story as saying, "We deny all charges and expect all accusations to be proven to be false in what is expected to be an upcoming court case."
The indictments, which were filed Thursday, allege that beginning before July 5, 1996 and continuing through August 2003, the Rileys conspired and agreed with one another to defraud the IRS and State of Minnesota.
The Rileys own and operate Riley Bros. Companies, Inc., which includes Riley Bros. Construction and other companies. Riley Bros. Construction primarily is a road construction business.
The indictments allege that the Rileys concealed from the IRS and the Minnesota Department of Revenue income earned by themselves and their employees, and that they defrauded the state by paying cash for work by employees who were receivng unemployment benefits.
The indictments allege that about $500,000 was paid by Riley Bros. to the Rileys and their employees that wasn't reported. The government also alleges that Joseph Riley made purchases with unreported money, and that the brothers paid more than $95,000 in bonuses that were not recorded in the company's payroll system.
According to the charges, from 1996 to 2003, the Rileys allegedly directed company bookkeepers to falsely record and disguise the payment of more than $79,000 of their personal expenses as company business expenses.
If convicted, Joseph Riley and John Riley each face a potential maximum penalty of five years in prison on the conspiracy count and three years on each count of filing a false tax return. John Riley faces an additional three years on a count of procuring a false tax return.
All sentences are determined by a federal district court judge. The case was investigated by the IRS-Criminal Investigation Division and the Minnesota Department of Revenue.