Tax fraud trial delayed by prosecutors
A trial for two Bastrop restaurateurs over tax fraud accusations that was set for this month has been delayed to Sept. 10, according to a request submitted by federal prosecutors.
Michael and Cynthia Herman had owned two downtown restaurants — Cindy’s Downtown and Hasler Brothers Steakhouse — and a restaurant along Texas 71 near the Bastrop-Travis county line, Cindy’s Gone Hog Wild. The couple has been charged with seven counts of tax fraud occurring between 2007 and at least 2014, with “the exact dates being unknown to the grand jury.”
Both defendants pleaded not guilty last year. Their three restaurants are either closed or under new ownership.
According to the indictment, the Hermans concealed “the true income of their businesses by depositing only a portion of the businesses’ cash receipts into their business bank accounts . ... And did report as income to their tax return preparer only those deposited cash receipts.”
Federal prosecutors allege that the couple then paid personal expenses out of their business accounts — including $1,108 for pool repair, utilities for their home and the salary of a household employee — and reported those as business transactions.
The grand jury of the Western District of Texas handed up the charges in September.
Federal prosecutors based in Washington and Dallas, as well as defense attorney Kevin Collins of the law firm Bracewell LLP, declined to comment.
The filing also says that the government has been investigating the couple since 2013, and its investigation has yielded 27,000 pages of discovery, several audio and video recordings, 44 boxes of materials seized during search warrants and one hard drive.
“Counsel is in the process of retaining a second expert witness to review and analyze eight years of general ledgers for one business, a corporation, and four to five years of general ledgers for a second business, an LLC,” prosecutors wrote when requesting the trial date be delayed. “That expert witness will likely be a CPA . ... Until after April 20, tax day, any CPA will likely be occupied with duties relating to the preparing and filing of taxes.”
If convicted, they face up to five years in prison for conspiracy to defraud and three years each for six charges of filing a false document. Fines can reach up to $250,000.
The case was initially assigned to U.S. District Judge Sam Sparks, a senior district court judge, but was transferred to U.S. District Judge Xavier Rodriguez when Sparks took senior status in January.