BOZEMAN — A Bozeman woman who co-owns a Belgrade-based construction company pleaded guilty on Friday, April 8, to charges that she failed to pay approximately $2.8 million in employee and employer taxes.
According to U.S. Attorney Leif M. Johnson, 42-year-old Melissa Lynne Horner of Bozeman spent some of the money on personal expenses, including recreational and motorsport vehicles.
Horner, co-owner of Belgrade-based H & H Earthworks, Inc., pleaded guilty on Friday to one felony count of failure to truthfully account for and pay over withholding and FICA taxes, and one misdemeanor count of failure to file employer’s quarterly return and pay tax.
Court documents say Horner is responsible for the financial portion of Earthworks, a family business she co-founded in 2004 that boasts projects including schools, shopping centers, hospitals, and residential subdivisions in Montana, North Dakota, Wyoming, and Idaho. Earthworks employed between 20 and 60 people from 2014 to 2019.
Beginning in March 2014 through 2019, Horner spent more than $100,000 to purchase and maintain personal motorsport vehicles, including dirt bikes and snowmobiles, $90,000 to a real estate title company in Bozeman, at least $50,000 on personal home renovations, and $20,000 for a motorhome.
According to court documents, Horner had Earthworks pay the expenditures while failing to pay over to the IRS payroll tax required to be withheld from Earthworks employee paychecks. She is also accused of withdrawing Federal Insurance Contribution Act (FICA) taxes from Earthworks employee wages without paying over the trust fund taxes to the IRS.
Horner allegedly also failed to pay over Earthworks’ portion of the FICA taxes that include Social Security and Medicare taxes.
“As the financial executive for Earthworks, Horner withheld nearly $3 million from employee wages to cover payroll, Medicare and Social Security taxes. Rather than pay over those amounts to the IRS as required by law, Horner spent the money on personal expenses like motorcycles, a motor home, and home renovations. As the deadline for filing tax returns approaches, the public should be aware that people like Horner who willfully violate the tax laws will be investigated and charged with felony tax crimes that can result in significant penalties including prison time, fines, and restitution,” U.S. Attorney Johnson said.
Horner faces a maximum of five years in prison, a $250,000 fine, and three years of supervised release on the felony count.
According to Horner’s plea agreement, the government will seek the dismissal of 32 remaining counts, and she will be responsible for total restitution of $2,878,522 if the court accepts the agreement at sentencing.
U.S. Magistrate Judge Kathleen L. DeSoto presided, and sentencing was set for Aug. 10 before U.S. District Judge Dana L. Christensen. Horner was released pending further proceedings.
Assistant U.S. Attorney Karla E. Painter is prosecuting the case, which was investigated by the IRS Criminal Investigation.
