Byron Center Resident Sentenced to Prison for Tax Evasion

James Scholten ordered to pay $868,707 in taxes due to the United States

GRAND RAPIDS, MICHIGAN - U.S. Attorney for the Western District of Michigan Timothy VerHey today announced that James Phillip Scholten, age 51, of Byron Center was sentenced to 20 months in federal prison by United States District Judge Jane M. Beckering. Additionally, Scholten was ordered to pay restitution to the IRS in the amount of $868,707 and serve three years of supervised release following prison.

U.S. Attorney VerHey stated, "Cheating on your taxes is not only illegal, it's also not worth the risk. Scholten knew he owed a lot of money to the government, had the money to pay, but decided to keep it for himself. Now he is going to prison and will have to pay his taxes anyway. I ask everyone to voluntarily pay the taxes they owe so that cases like this become unnecessary."

Court records reflect that Scholten pled guilty to tax evasion and admitted that he failed to report $3.4 million of income he generated through the sale of scrap material over a 13-year period. Scholten stole the highly valuable scrap material from his employer and used the proceeds to unlawfully enrich himself and finance a lifestyle he could not otherwise afford. Scholten intentionally failed to provide his CPA with records documenting his recycling income to evade assessment of tax on that income. For example, in 2021, Scholten reported that he only owed $2,465 in federal income tax. In fact, Scholten obtained an additional $610,818 in taxable income from recycling activity, which resulted in an additional tax due and owing of $172,618.

"Today, justice is served, and James Scholten has been held accountable for his criminal actions. Stealing materials from your employer and using them for your own profit can only be hidden for so long," said Karen Wingerd, Special Agent in Charge, Detroit Field Office, IRS Criminal Investigation. "IRS special agents work tirelessly every day to identify and bring to prosecution both those who commit fraud, and those who evade their tax obligation on that fraudulent money - it's a matter of maintaining public confidence in our system of taxation as well as the justice system."

This matter was investigated by IRS Criminal Investigation, the law enforcement arm of the Internal Revenue Service. Assistant U.S. Attorney Chris O'Connor prosecuted it.