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Former City Councilman Pleads Guilty in Federal Court

U.S. Attorney’s Office April 26, 2010
  • District of South Carolina (803) 929-3000

COLUMBIA, SC—Acting United States Attorney Kevin F. McDonald stated today that Ernest W. Cromartie, II, of Columbia, South Carolina, pled guilty today in federal court to one count of income tax evasion and two counts of aggravated structuring, violations of Title 26, United States Code, Section 7201, and Title 31, United States Code, Sections 5324(a)(3) and (d)(2). Chief United States District Judge David C. Norton accepted the plea and will sentence Cromartie after he has reviewed a pre-sentence report which will be prepared by the United States Probation Office.

Cromartie admitted in court that he knowingly and wilfully engaged in income and employment tax evasion for the tax years 2003-2009. Cromartie, a lawyer, also owned and operated a liquor store. Beginning in 2003, Cromartie failed to make appropriate employment tax payments due to the IRS based on his operation of the liquor store. Cromartie began to engage in more aggressive tax evasion beginning in 2005 when he filed an income tax return disclosing an income tax liability for the tax year 2004 of $25, 316.00 which he subsequently failed to pay. Cromartie evaded the IRS’ collection efforts with respect to the taxes due and owing for the tax year 2004, and began a pattern of failing to pay employment taxes for his law firm as well. Cromartie’s actions have caused a total tax loss to the IRS of approximately $58,075.00, as he failed to pay a total of $10,192.84 in employment taxes from his law firm and $22,567.02 from his liquor store business, in addition to the $25, 316.00 in income taxes still due and owing from 2004.

Cromartie also began structuring the deposit and withdrawal of attorney’s fees in and out of his law firm escrow account and maintained only minimal amounts of money in his law firm’s operating account in an effort to prevent the IRS from determining his ability to pay the taxes owing from the 2004 tax year. In 2005, Cromartie structured transactions totaling approximately $101,748.37 (Count Two) ; in 2006, Cromartie structured transactions totaling approximately $185,398.33 (Count Three).

Special Agent in Charge Jeannine A. Hammett, IRS Criminal Investigation, stated, “The privilege of serving the citizens of the city is accompanied by a sacred responsibility to conduct oneself honorably, ethically, and within the bounds of law. When servants of the people are involved with and perform illegal acts, it shakes the trust of the people. IRS-Criminal Investigation will diligently investigate public officials who abuse the system.”

Mr. McDonald stated the maximum penalty Cromartie can receive as to Count One is a fine of $250,000.00 and imprisonment for five years. The maximum penalty Cromartie can receive on the structuring counts is a fine of $500,000.00 and imprisonment for 10 years.

The case was investigated by agents of the Internal Revenue Service-Criminal Investigation (IRS-CI) and the Federal Bureau of Investigation (FBI) . Assistant United States Attorney Mark Moore of the Columbia office is prosecuting the case.

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