Rindge: KMO head pleads guilty to $664,000 in tax evasion
Case tied to $27.8M investment scheme
Aaron Olson of Rindge has entered into a plea agreement with the U.S. Attorney’s Office for the District of New Hampshire on four counts of tax evasion equal to more than $664,000, according to documents filed at the U.S. District Court of New Hampshire on April 14. The case is related to an investment scheme in which Olson admits in court documents he defrauded investors of $27.8 million, of which $2.6 million was diverted for his own personal use. In exchange for Olson’s guilty plea, prosecutors have said they will recommend a 42-month prison sentence for Olson, as well as restitution to his investors, which will be determined during his sentencing proceedings scheduled for May 15.
The charges against Olson, which he admits to in his plea agreement, cover a time period from 2007 through 2010 and involve his investment businesses AEO Associates and KMO Associates, which was registered in Massachusetts. Olson operated his businesses out an office in Jaffrey, according to court documents.
“From about 2007 through about 2010, the defendant used AEO and later KMO to obtain approximately $27.8 million from individuals and organizations ostensibly to invest on their behalf in various commodity, stock and bond markets,” Olson’s plea agreement reads.
Olson admits, according to the plea agreement, that he was not licensed as an investment broker in New Hampshire or any other jurisdiction, and he did not register either AEO or KMO with the state as an investment business. He also failed to maintain an accounting of the gains and losses incurred by his investors due to any investments he made on their behalf. Olson co-mingled the funds entrusted to him by investors with his own funds, diverting approximately $2.6 million of his investor’s money for his own use, according to his plea agreement. He also used investor’s funds to make payments of what he falsely purported to be earnings to other investors, according to court documents. In order to mislead investors, Olson sent investors false earning statements that showed significant earnings on their investments, which Olson knew to be fraudulent, the plea agreement says.
According to court documents, the U.S. Attorney argued and Olson has pleaded guilty to attempting to evade or defeat taxes by failing to report the gross receipts and expenses associated with the operation of AEO and KMO on his income tax returns; failing to report the gross receipts and expenses associated with KMO; failing to file forms with the IRS summarizing investors annual gains and losses; co-mingling investors funds with his funds in an E*Trade investment account; issuing forms for investment gains and losses that belonged to investors and not to him; and reporting investment gains and losses on his own tax returns that belonged to investors and not to him.
Olson falsely reported his income taxes on four separate occasions, with the differences between his filings and his actual tax liability equaling $664,912, according to his plea agreement: In 2007, Olson reported owing $1,401 in taxes, when he owed an additional $320,744; in 2008, he reported owing $1,419, when he owed an additional $66,638; in 2009, he reported owing $6,331, when he owned an additional $25,889; and in 2010, he reported owing $26,749, when he owed an additional $251,641.
The maximum penalties for each count against Olson could have been a maximum prison term of five years, a maximum fine of $250,000 plus the cost of prosecution, and a term of supervised release of not more than three years. According to Olson’s plea agreement, the government and Olson will jointly recommend that Olson be sentenced to 42 months in prison. In addition, the government and Olson shall also recommend that he pay restitution to the people and organizations that placed funds with him to invest, in lieu of paying back taxes to the IRS.
The court may, under the agreement, disregard the plea agreement and make its own ruling on the case.
Sentencing for Olson will be held on May 15 at 2 p.m. at the U.S. District Court in Concord, according to the U.S. District Attorney’s Office. The office declined to comment on the case until the sentencing is complete. Messages requesting comment from Olson and his attorney, Robert S. Carey, were not returned by press time Monday.
Kevin Moquin, an auditor with the state Bureau of Securities, said Monday that the N.H. Bureau of Securities is continuing its investigation of Olson’s investments.
Other KMO suits
In a separate court case, Olson’s investment company KMO saw a favorable return last month in its suit against the town of Fitzwilliam. Olson, through KMO, has been attempting to gain permission to retrieve previously mined granite from its Webb Hill Quarry in Fitzwilliam. In 2013, KMO filed a civil lawsuit against the town, in which KMO claimed the company did not have to file a mining application with the town, as state mining laws supersede town zoning. Last month, the Cheshire County Superior Court ruled in KMO’s favor, and then on April 7 denied the town’s motion for reconsideration.
The lawsuit followed on the heels of an attempt by KMO to change the town’s zoning ordinance by petition during Fitzwilliam’s 2013 March Town Meeting. The petition, which was resoundingly defeated in a 455-129 vote, asked voters to allow the taking of already-cut stone from quarries to become a permitted use in the town’s residential district.
Fitwilliam Planning Board Vice-Chair Macreay Landy said in an interview Monday that members of the Planning Board questioned why the town would not appeal the decision to a higher court. Personally, Landy said he felt that the court had made the wrong decision, but the town had received advice from attorneys that there is not a viable grounds for appeal.
“It was a very tightly written decision,” said Landy. “I personally don’t think we should [pursue it] in that there doesn’t appear that there are any ground for that.”
Now, said Landy, KMO will have to apply to the state to mine the quarry, and there will be a process to be followed at the state level. During that process, the town will still have its say.
“That’s where the town can raise issues such as environmental safety, public safety and noise,” said Landy, adding that he does feel the state process has very adequate safeguards for those concerns. “We just have to wait for that to happen.”