Developer Scott Chappelle gets more than three years in prison for tax evasion
GRAND RAPIDS − Lansing-area developer Scott Chappelle was sentenced to 38 months in federal prison Tuesday for what the government called a sophisticated scheme to avoid paying taxes.
U.S. District Judge Jane Beckering also ordered Chappelle to spend three years on supervised release after he gets out of prison and pay more than $1.2 million in restitution for tax evasion, court records indicate. Chappelle also was fined $150,000.
“Scott Chappelle spent nearly ten years evading taxes he owed to the IRS,” Acting Deputy Assistant Attorney General Stuart Goldberg, of the justice department’s tax division, said in a news release. “At the same time he was falsely claiming financial hardship, Chappelle was spending money on multiple homes, payments toward a luxury yacht, and elective plastic surgery.”
Timothy Belevetz, an attorney for Chappelle, declined to comment on the sentence.
Chappelle, 61, is an attorney and former certified public accountant who operated Terra Management Co., Strathmore Development Co. and Terra Holdings LLC, all of which were connected to the tax evasion case. The government said he lives in Okemos and East Lansing.
His companies have been involved in commercial and residential developments in Michigan and several other states, including Lansing-area projects Red Cedar Flats and a Meridian Township office development off Northwind Drive. Chappelle also spent years trying to develop projects at Grand River Avenue and Abbot Road in East Lansing but ultimately sold the property.
In 2020, Chappelle was indicted by a grand jury on two counts each of tax evasion, filing false documents and making a false statement to investigators and one count each of filing a false tax return and bank fraud.
The government said Chappelle failed to pay the IRS more than $830,000 in employment taxes withheld from employee wages between 2010 through 2019. When the IRS tried to collect the unpaid taxes, Chappelle tried to avoid paying them by lying about his companies' assets and income, failing to disclose he had a vacation house on Lake Michigan and buying property in names other than his own, according to charging documents.
He pleaded guilty to one count of tax evasion in April. The charge carries a maximum penalty of five years in prison, three years of supervised release and a fine of $250,000.
As part of his guilty plea, Chappelle admitted failing to pay the IRS employment taxes withheld from employees' paychecks and making false statements to IRS investigators, the U.S. Attorney's Office said.
In court documents, prosecutors said Chappelle used sophisticated tactics to avoid paying taxes while maintaining a swanky lifestyle that included a 62-foot yacht and a vacation home in Harbor Springs.
In his own court filings, an attorney for Chappelle said the developer deserved a more lenient sentence, noting Chappelle didn't use shell companies or fictitious entities to hide assets. Chappelle relied upon "a publicly transparent structure typical in the industry" and didn't try to hide money offshore, the attorney wrote.
"He maintained impeccable organizational compliance, including registering assumed names with the state ... and the entities did business so the activity could be traced back to the true party in interest," Belevetz wrote.
Contact Ken Palmer atkpalmer@lsj.com. Follow him on Twitter @KBPalm_lsj.
This article originally appeared on Lansing State Journal: Developer Scott Chappelle sentenced tax evasion Harbor Springs home
