Jeffrey Wirth was the sole owner of the Wirth Companies, a Minnesota commercial real estate company. Mr. Wirth developed numerous trophy properties in the Twin Cities, including the Grand Hotel in Minneapolis, the Grand Rios Hotel & Waterpark in Brooklyn Park, and the Grand Lodge Hotel & Waterpark in Bloomington.
The problem is, according to the IRS and the US Attorney’s Office, Mr. Wirth began building a mansion on one of Minnesota’s 10,000 lakes (an island on Lake Minnetonka). There’s nothing wrong with a successful businessman building a mansion, of course. However, there is a major problem with paying for personal expenses (such as a mansion) out of your business and not reporting it on either a corporate or individual return. And that, along with paying personal expenses out of his business, is one of the charges against Mr. Wirth.
Additionally, Mr. Wirth and his ex-wife, Holly Damiani, are accused of understating their wages.
From the indictment: From 2002 through 2006, while they actively managed the business and received substantial distributions from [The Wirth Companies], Wirth and Damiani each claimed wages of $12,000 per year or less…As a result of the understatement of wages reported on their Forms W-2, on the TWC income tax returns, and on the income tax returns for Wirth and Damiani, the amounts of employment taxes paid by TWC, Wirth, and Damiani were far less than should have been paid.
I suspect that the Wirth Companies were organized as an S-Corporation, and this charge in the indictment relates to not paying a reasonable salary. The understatement of wages is part of a conspiracy charge against the defendants (which also include Michael Murry, the tax preparer for Mr. Wirth and TWC). Mr. Wirth also allegedly filed false corporate tax returns for 2004 and 2005.
The three individuals face one count of conspiracy to defraud the United States. Mr. Wirth was charged with two additional counts of filing a false individual tax return and two counts of filing a false corporate tax return. Ms. Damiani was charged with two counts of filing a false individual tax return. Mr. Murry was charged with two counts of procuring a false individual tax return and two counts of filing a false corporate tax return.
Speaking of Mr. Wirth’s mansion, it’s for sale. The home has four bedrooms, six bathrooms, a 15-car garage with a total of 18,000 square feet, and is the largest in the Minneapolis suburb of Greenwood. It is, though a fixer-upper: It’s unfinished.
