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Eastern Iowa lumberyard owner admits to tax charges

July 23, 2009

The owner of a lumberyard in Hopkinton, Iowa has pleaded guilty to bankruptcy fraud and tax charges. Court documents report that Keith Chapman diverted more than $450,000 in receipts for Chapman Lumber Company, Inc. for personal purposes:

Defendant opened the mail at Chapman Lumber. Between June 10, 1999, and February 2005, defendant diverted some of the accounts receivable checks made payable to Chapman Lumber and deposited them into the Wells Fargo account. Defendant transferred funds from the Wells Fargo account into his personal bank account. Defendant also wrote checks on the Wells Fargo account to purchase items and services for his or others' benefit, and not for business purposes, such as a membership in a country club, jewelry, golf equipment, and clothing, among other items.

The standard IRS examination program has procedures to find this sort of skimming. Large purchases of personal items are pretty easy for an agent to identify. Mr. Chapman now faces prison, and likely financial ruin. All in all, skimming seems to be a flawed financial strategy.

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