Joseph C. Kupfer Sentenced to 10 Years in Prison for Theft of Federal Help America Vote Act Funds and Tax Evasion
|U.S. Attorney’s Office September 11, 2013|
ALBUQUERQUE—This afternoon, U.S. District Judge William P. Johnson sentenced Joseph C. Kupfer, 50, of Rio Rancho, New Mexico, to 10 years in federal prison, followed by three years of supervised release, for his convictions for conspiracy, theft of government property, and tax evasion. Kupfer also was ordered to pay $746,375 in restitution to the state of New Mexico and $288,339 in restitution to the IRS. Kupfer is to pay the restitution payment to the state of New Mexico jointly with co-defendant Armando C. Gutierrez, 65, of Corpus Christi, and the restitution payment to the IRS jointly with his wife and co-defendant Elizabeth D. Kupfer, 51. Kupfer also was ordered to forfeit $746,375 to the United States.
Kupfer’s sentence was announced by Acting U.S. Attorney Steven C. Yarbrough, New Mexico Attorney General Gary K. King; Dawn Mertz, Special Agent in Charge of the Phoenix Field Office of IRS-Criminal Investigation; and Carol K.O. Lee, Special Agent in Charge of the Albuquerque Division of the FBI.
This case was initiated in December 2010 by the filing of a three-count indictment charging Kupfer and his wife with failing to report $768,333 in taxable income during tax years 2004 through 2006 and evading $286,175 in federal taxes. An 11-count superseding indictment was filed in July 2011, which added Gutierrez as a defendant and five counts charging Kupfer and Gutierrez with conspiracy and theft of government property relating to federal HAVA funds administered by former New Mexico Secretary of State (NMSOS) Rebecca Vigil-Giron. The superseding indictment also charged Gutierrez with two counts of obstruction of justice relating to a federal audit and investigation into the misuse of federal HAVA funds and one count of laundering unlawfully obtained proceeds. At the time of the events described in the superseding indictment, Kupfer and Gutierrez were providing consulting services to the NMSOS under HAVA contracts, and Mrs. Kupfer was an employee of the New Mexico Attorney General’s Office (NMAGO) who had been detailed to work for the NMSOS.
The court severed the tax evasion counts from the other counts in the superseding indictment for purposes of trial, and scheduled separate trials for the Kupfers on the three tax evasion charges (the tax trial), and for Kupfer and Gutierrez on the conspiracy, theft, obstruction of justice, and money laundering charges (the HAVA trial).
The tax trial began on August 13, 2012, and ended on August 17, 2012, when the jury returned a guilty verdict against the Kupfers on all three tax evasion charges. The evidence established that, during the years 2004 through 2006, Kupfer received income, including federal HAVA funds, from Kupfer Consulting (KC), a business owned and operated by Kupfer, and the Kupfers reported income from KC in their joint personal tax returns. During those years, the Kupfers received $1,304,421 in revenue from KC but reported only $502,541 in their tax returns. By concealing approximately $768,333 in income, the Kupfers avoided paying taxes on that money.
The HAVA trial began on January 22, 2012, and ended on Januaru 31, 2013, when the jury returned guilty verdicts against Kupfer and Gutierrez on the conspiracy and theft of government property charges and against Gutierrez on the obstruction of justice and money laundering charges. The evidence established that, between April 2003 and December 2006, the NMSOS administered almost $20 million in federal HAVA funds, which were designated for voter education, increasing voter registration, and meeting new standards for election administration and voting systems, through a number of contracts. The contracts included a multi-million-dollar contract for voting-related advertising awarded to A. Gutierrez and Associates Inc. (AGA), which was owned and operated by Gutierrez, and three small contracts for increasing voting accessibility for the disabled that were awarded to KC, Kupfer’s business.
According to the evidence, Gutierrez and Kupfer conspired to defraud the United States by stealing federal HAVA funds and converting the funds to their own use. Between September 2004 and October 2006, AGA received a total of $6,271,810 in federal HAVA funds from the state of New Mexico, but Gutierrez submitted documentation supporting only $3,385,151 in services and costs, resulting in an overpayment of $2,500,483 to which AGA was not entitled. In addition to the three small contracts totaling $70,000 that were awarded to KC by the NMSOS, AGA made nine payments totaling $746,375 in federal HAVA funds to Kupfer between October 2004 and November 2006, which far exceeded the value of any work that Kupfer ever actually performed for AGA under the HAVA contract.
In early 2007, the Election Assistance Commission began an audit into the use of federal HAVA funds by the NMSOS. The AGA HAVA contract immediately became the primary focus of the audit because AGA could not provide documentation to support the federal HAVA funds AGA received. In an effort to provide documentation for the federal HAVA funds AGA received, AGA provided 187 fraudulent invoices totaling $1,137,000 that purported to represent payment to media vendors when, in fact, AGA never paid any vendors based on these invoices. Subsequent to the EAC audit and in response to federal grand jury subpoenas, AGA and KC submitted fraudulent invoices that purported to support the nine payments totaling $746,375 that KC received from AGA between October 2004 and November 2006. Three of these invoices sought payments in the aggregate amount of $236,605 for production of a poll worker training video that was actually produced by another subcontractor at the cost of $75,000.
“The sentence imposed on Joseph Kupfer concludes the prosecution of an important case that sends a powerful message to those who do business with the government: we will aggressively investigate and vigorously prosecute those who steal federal funds and dodge their civic obligation to pay their rightful share of taxes,” said Acting U.S. Attorney Steven C. Yarbrough. “The prosecutors and agents who handled the investigation and prosecution of this case deserve tremendous credit and our thanks for doing an outstanding job and ensuring that the Kupfers and Gutierrez were held responsible for their crimes.”
New Mexico Attorney General Gary King said, “I am very proud of our involvement in this case, especially the work that my investigators produced, which helped in the prosecution and conviction of Mr. Kupfer. This is another good example of how cooperation between our respective offices can result in justice being served.”
“Mr. Kupfer violated the public’s trust by misappropriating voter education funds and using the money to line his own pockets. In addition, he committed tax evasion by intentionally concealing over $750,000 of income. When you steal federal funds, cheat on your taxes, and take steps to conceal your crimes, prison is usually the end result,” stated IRS-Criminal Investigation Special Agent in Charge Dawn Mertz.
“If you do business with the government and decide to steal from taxpayers, you better expect the FBI to come after you. In this case, two individuals sought to enrich themselves at the expense of a program designed to improve voting systems and voter access. I would like to congratulate the FBI special agents who worked so hard on this complex investigation, alongside their partners at the U.S. Attorney’s Office, IRS-Criminal Investigation and the New Mexico Attorney General’s Office,” said FBI Special Agent in Charge Carol K.O. Lee.
On May 14, 2013, Mrs. Kupfer was sentenced to three years in prison, followed by three years of supervised release, for her tax evasion conviction. Gutierrez was sentenced on August 19, 2013, to 10 years in federal prison, followed by three years of supervised release, for his convictions for conspiracy, theft of government property, obstruction of justice, and money laundering. Gutierrez also was ordered to pay $2,500,483 in restitution to the state of New Mexico, including $746,375 that is to be paid jointly with Kupfer. He also was ordered to forfeit $2,500,483, including his interest in his Corpus Christi residence, to the United States.
The case was investigated by IRS-Criminal Investigation and the Albuquerque Office of the FBI, with assistance from the New Mexico Attorney General’s Office. It was prosecuted by Assistant U.S. Attorneys Tara C. Neda, Jeremy Peña, and Cynthia L. Weisman.