Grand Rapids, Michigan – November 30, 2015 – U.S. Attorney Patrick A. Miles, Jr., announced today that Michael Aho Kennedy, age 67, formerly a licensed attorney in Petoskey, Michigan, pled guilty to one count of mail fraud and one count of filing a false tax return in conjunction with an indictment filed on October 8, 2015. Kennedy’s sentencing hearing in the United States District Court for the Western District of Michigan will be scheduled in the near future before United States District Judge Janet T. Neff. At that time, Kennedy faces a maximum term of imprisonment of 20 years on the mail fraud conviction and up to 3 years’ imprisonment for filing a false tax return. The plea agreement additionally requires Kennedy to pay restitution to the victims of his mail fraud scheme and to the Internal Revenue Service in conjunction with his false tax filings.
According to the plea agreement, Kennedy drafted a trust for his long-time client and family friend and eventually became her trustee. In his role as trustee, Kennedy defrauded her of over $1,000,000.00 by regularly withdrawing more money from her investment accounts than necessary to pay her expenses, transferring this excess money to his law office’s business account, and then using the money for his own personal and business expenses. Kennedy concealed his fraud from this client by sending her false monthly statements of account that showed that the balance of her account was stable and earning interest, when in fact the balance of her account was rapidly diminishing due to his fraud. When Kennedy exhausted all of her funds, he defrauded an additional elderly client of $114,000.00 that he then used for his own benefit and to pay the continuing expenses of the initial client that he defrauded. Kennedy pled guilty to filing a false federal tax return because he originally filed federal tax returns that included all of the income that he embezzled from his clients, but when the Internal Revenue Service inquired as to why he had not paid his tax liabilities on that income, Kennedy falsely amended his returns claiming that the proceeds of his fraud scheme were loans and working capital that were not subject to income tax.
“Vigorous prosecution of fraud cases, especially those involving professionals who prey upon clients to whom they owe the highest fiduciary duties, remains a priority of this Office,” said United States Attorney Patrick A. Miles, Jr. “Unfortunately, Kennedy used his position of trust to line his own pockets, rather than to protect his clients.”
“Honest and law abiding citizens are fed up with the likes of those who use deceit and fraud to line their pockets with other people’s money, as well as skirt their tax obligations,” said Jarod J. Koopman, IRS Criminal Investigation, Special Agent in Charge. “Mr. Kennedy’s actions not only caused financial harm to his elderly clients, but also the honest taxpayer when he committed significant tax fraud violations as detailed in the indictment. Tax crimes have erroneously been referred to as victimless, but that position could not be more wrong since we all end up paying when someone attempts to dodge our tax system.”
The investigation of this case was handled by the Traverse City office of the Internal Revenue Service-Criminal Investigation Division. Assistant United States Attorney Ronald M. Stella is handling the prosecution.
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