Valley residents convicted of tax crimes

ANCHORAGE -- Three Valley residents were convicted Friday by a federal jury in Anchorage of conspiracy to defraud the Internal Revenue Service and related tax crimes.

Helen M. Smith, 59, and her brother Leroy Sbrusch, 56, both of Wasilla, and Ken Smith, 61, of Big Lake, were convicted of conspiring to defraud. Helen Smith and Sbrusch were also convicted of failure to file 1996, 1997 and 1998 income tax returns, and also evading Helen Smith's 1998 income taxes.

Sbrusch was also convicted of one count of structuring financial transactions to avoid currency transaction reporting requirements in 1998. U.S. Attorney Tom Bradley, who prosecuted the case, said that crime came to light when IRS investigators subpoenaed Sbrusch's bank records from Matanuska Valley Federal Credit Union.

Investigators saw that Sbrusch had withdrawn $8,000 cash on April 15, 1998, followed by withdrawals of $8,500 on April 17 and $7,300 on April 18. Any currency transaction of more than $10,000 must be reported by the bank to the IRS, and Sbrusch's withdrawals raised a red flag, Bradley said.

"In a typical IRS investigation we look at all the person's financial transactions," said Dusty Faulkner, supervisory agent for the IRS criminal investigation division in Alaska. "Criminal investigation is committed to making sure everyone pays their equitable share of taxes."

Helen Smith owned two laundromats in the Valley in the 1990s. Her gross income was more than $440,000 in 1996, more than $540,000 in 1997, and over $700,000 in 1998, but she didn't file in any of the years, according to the U.S. Attorney's office, and neither Helen Smith nor Sbrusch had filed a return since 1990.

After the sale of Wasilla Wash Day for $700,000 in April 1998, evidence at trial showed the defendants tried to launder profits to evade collection by the IRS. They purchased gold and silver under a third-party name, bought land in Texas under false names, and purchased large-denomination cashier's checks issued to nonexistent entities, according to the U.S. Attorney.

They will be sentenced Feb. 27, 2004.