Case 1:08-cr-00026-DLH Document 2 Filed 04/23/08 Page 1 of 15

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHWESTERN DIVISION
UNITED STATES OF AMERICA
-vs-

MICHEAL L. FISHER, AMIEL
SCHAFF, and FISHER SAND AND
GRAVEL CO., INC.

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INDICTMENT
Case No. _______________________
Violations: 18 U.S.C. § 371 and
26 U.S.C. §§ 7206(1) and 7206(2)

The Grand Jury Charges:
Introductory Allegations
At all times material to this Indictment:
1.

Defendant MICHEAL L. FISHER (hereinafter "defendant FISHER") is a

resident of Dickinson, North Dakota. Defendant FISHER is the Vice-President, minority
shareholder, and a member of the Board of Directors of defendant FISHER SAND AND
GRAVEL CO., INC.
2.

Defendant AMIEL SCHAFF (hereinafter "defendant SCHAFF") is a

resident of Dickinson, North Dakota. Defendant SCHAFF is the Treasurer, Chief
Financial Officer, and a member of the Board of Directors of defendant FISHER SAND
AND GRAVEL CO., INC.
3.

Defendant FISHER SAND AND GRAVEL CO., INC. (hereinafter

"defendant FSG") is a North Dakota corporation with its principal place of business
located at 3020 Energy Drive, Dickinson, North Dakota. Defendant FSG is a

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subchapter-C corporation for tax purposes that engages primarily in mining and the sale
of aggregate such as sand, gravel, and crushed rock, and the manufacture, sale, and repair
of aggregate and mining equipment systems.
4.

General Steel and Supply Co. (hereinafter "GSS"), is a North Dakota

corporation and a wholly-owned subsidiary of defendant FSG that engages in the
manufacture, sale, and repair of aggregate and mining equipment systems.
5.

From in or about 2002 and continuing until at least in or about 2004, Smyth

Asphalt Mines, Inc., a Texas corporation, was a wholly-owned subsidiary of defendant
FSG.
6.

For each tax year 2001 through 2004, defendant FSG and GSS, and

beginning for tax year 2002, Smyth Asphalt Mines, Inc. (collectively "FSG and
Subsidiaries") reported income and expenses on a consolidated U.S. Corporation Income
Tax Return, Form 1120. A "consolidated" income tax return is one on which a group of
affiliated corporations report to the Internal Revenue Service combined income and
expenses and compute the combined taxable income and income tax for the group.
7.

For each tax year ending on December 31 from 2001 through 2004,

defendant FSG, acting through defendants FISHER and SCHAFF, and others known and
unknown to the Grand Jury, engaged an outside accounting firm to prepare its corporate
income tax returns.
8.

Defendant FSG maintains its headquarters in Dickinson, North Dakota,

where the employees of FSG and Subsidiaries, including defendant SCHAFF, conduct the
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accounting functions for defendant FSG. Defendant FSG maintains books and records of
its financial transactions, generates various financial reports including year-end financial
statements, and provides those reports to the outside accountants for the preparation of
defendant FSG's income tax returns.
9.

Defendant FISHER owns rental real estate through an entity he controls

named Badlands Properties, LLC, a North Dakota limited liability company (hereinafter
"Badlands"). Defendant FISHER is the single member and sole owner of Badlands.
Defendant FISHER reported the income and expenses for Badlands' rental real estate
activity on Schedules E attached to his U.S. Individual Income Tax Returns, Forms 1040,
for tax years 2001, 2002, 2003, and 2004.
10.

The Internal Revenue Service is an agency of the United States Department

of the Treasury, responsible for administering and enforcing the tax laws of the United
States.

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COUNT ONE
Conspiracy to Defraud
The Grand Jury realleges the Introductory Allegations as though fully set forth
herein and further alleges:
Object of the Conspiracy
11.

Beginning on or before January 13, 2001, and continuing thereafter up to

and including at least September 19, 2005, within the District of North Dakota and
elsewhere,
MICHEAL L. FISHER, AMIEL SCHAFF, AND
FISHER SAND AND GRAVEL CO. INC.
and others known and unknown to the Grand Jury, knowingly and unlawfully combined,
conspired, confederated, and agreed to defraud the United States by deceitful and
dishonest means by impeding, impairing, obstructing, and defeating the lawful
government functions of the Internal Revenue Service of the Department of the Treasury
of the United States of America, in the ascertainment, computation, assessment, and
collection of federal corporate and individual income taxes.
Manner and Means of the Conspiracy
The manner and means by which the unlawful object of the conspiracy was sought
to be accomplished included, among other things, the following:
12.

Defendants FISHER, SCHAFF, FSG, and others known and unknown to

the Grand Jury caused the personal expenses of defendant FISHER and other Fisher
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family members to be paid by and through defendant FSG, including, but not limited to,
construction expenses and furnishings for defendant FISHER's personal residence,
construction expenses for improvements to defendant FISHER's rental real estate held
through Badlands, household and utility bills, vacations, credit card bills, legal expenses,
and medical expenses;
13.

As part of the conspiracy, defendants FISHER, SCHAFF, FSG, and others

known and unknown to the Grand Jury authorized and caused to be authorized the
payment of defendant FISHER's and Fisher family members' personal expenses;
14.

It was further part of the conspiracy that defendants FISHER, SCHAFF,

FSG, and others known and unknown to the Grand Jury created and caused to be created
false and fraudulent entries on defendant FSG's corporate books and records, which
concealed the payment of defendant FISHER's and Fisher family members' personal
expenses by fraudulently accounting for those payments as business expenses of
defendant FSG;
15.

As part of the conspiracy defendants FISHER, SCHAFF, FSG, and others

known and unknown to the Grand Jury provided and caused to be provided false and
fraudulent financial reports and other corporate records to defendant FSG's outside
accountants for the preparation of defendant FSG's corporate income tax returns;
16.

It was further part of the conspiracy that defendants FISHER, SCHAFF,

FSG and others known and unknown to the Grand Jury filed and caused to be filed with
the Internal Revenue Service false and fraudulent consolidated U.S. Corporation Income
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Tax Returns, Forms 1120, for FSG and Subsidiaries that deducted the payments of
defendant FISHER's and Fisher family members' personal expenses as business expenses;
17.

As part of the conspiracy, defendant FISHER and others known and

unknown to the Grand Jury filed and caused to be filed with the Internal Revenue Service
false and fraudulent Individual Income Tax Returns, Forms 1040, for defendant FISHER,
which failed to report as income the payments made by FSG to third parties for defendant
FISHER's personal expenses.
Overt Acts in Furtherance of the Conspiracy
In furtherance of the conspiracy, and to effect the object thereof, the following
overt acts, among others, were committed in the District of North Dakota, and elsewhere:
18.

On or about May 31, 2001, defendant SCHAFF caused defendant FSG to

pay a $59,300.00 check to a construction company for the benefit of defendant FISHER
and Badlands;
19.

On or about June 30, 2001, defendant FISHER caused defendant FSG to

pay a $41,350.00 check to a construction company for his own benefit and the benefit of
Badlands;
20.

On or about January 15, 2002, defendant FISHER caused defendant FSG to

pay a $26,506.00 check to a construction company for his own benefit and the benefit of
Badlands;
21.

On or about April 30, 2002, defendant FSG caused defendant FSG to pay a

$270.28 check to an electric cooperative for the benefit of a Fisher family member;
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22.

On or about June 27, 2002, defendants FISHER, SCHAFF, and FSG filed

and caused to be filed with the Internal Revenue Service a false and fraudulent
consolidated U.S. Corporation Income Tax Return, Form 1120, for tax year 2001 that
overstated FSG and Subsidiaries' cost of goods sold and total deductions;
23.

On or about June 27, 2002, defendant FISHER filed and caused to be filed

with the Internal Revenue Service a false and fraudulent U.S. Individual Income Tax
Return, Form 1040, for tax year 2001 that understated defendant FISHER's true and
correct income;
24.

On or about August 25, 2002, defendant SCHAFF caused defendant FSG to

pay a $157.69 check to a retail pharmacy for the benefit of a Fisher family member;
25.

On or about December 19, 2002, defendant FISHER caused defendant FSG

to pay a $31,235.92 check to a construction materials company for his own benefit and
the benefit of Badlands;
26.

On or about December 31, 2002, defendant FISHER caused defendant FSG

to pay a $14,053.00 check to a construction company for his own benefit and the benefit
of Badlands;
27.

On or about January 28, 2003, defendant FISHER caused defendant FSG to

pay a $3,865.71 check to a construction materials company for his own benefit;
28.

On or about January 31, 2003, defendant FSG paid and caused to be paid a

$1,763.40 check to a property management company for the benefit of Fisher family
members;
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29.

On or about February 21, 2003, defendant FISHER caused defendant FSG

to pay a $50,000.00 check to a construction company for his own benefit;
30.

On or about March 31, 2003, defendant SCHAFF caused defendant FSG to

pay a $4,689.00 check to a law firm for the benefit of a Fisher family member;
31.

On or about March 31, 2003, defendant FSG paid and caused to be paid a

$11,933.00 check to a construction sub-contractor for the benefit of defendant FISHER;
32.

On or about April 25, 2003, defendant FISHER caused defendant FSG to

pay a $20,894.00 check to a construction sub-contractor for his own benefit;
33.

On or about April 25, 2003, defendant FISHER caused defendant FSG to

pay a $12,200.00 check to a construction sub-contractor for his own benefit;
34.

On or about April 25, 2003, defendant FISHER caused defendant FSG to

pay a $10,000.00 check to a construction sub-contractor for his own benefit;
35.

On or about April 20, 2003, defendants FISHER, SCHAFF, and FSG filed

and caused to be filed with the Internal Revenue Service a false and fraudulent
consolidated U.S. Corporation Income Tax Return, Form 1120, for tax year 2002 that
overstated FSG and Subsidiaries' cost of goods sold and total deductions;
36.

On or about April 15, 2003, defendant FISHER filed and caused to be filed

with the Internal Revenue Service a false and fraudulent U.S. Individual Income Tax
Return, Form 1040, for tax year 2002 that understated defendant FISHER's true and
correct income;
37.

On or about July 31, 2003, defendant FISHER caused defendant FSG to pay
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a $8,111.17 check to a construction materials company for his own benefit;
38.

On or about March 15, 2004, defendants FISHER, SCHAFF, and FSG

filed and caused to be filed with the Internal Revenue Service a false and fraudulent
consolidated U.S. Corporation Income Tax Return, Form 1120, for tax year 2003 that
overstated FSG and Subsidiaries' cost of goods sold and total deductions;
39.

On or about April 29, 2004, defendant SCHAFF caused defendant FSG to

pay a $152.89 check to a retail pharmacy for the benefit of a Fisher family member;
40.

On or about April 15, 2004, defendant FISHER filed and caused to be filed

with the Internal Revenue Service a false and fraudulent U.S. Individual Income Tax
Return, Form 1040, for tax year 2003 that understated defendant FISHER's true and
correct income;
41.

On or about April 30, 2004, defendant FISHER caused defendant FSG to

pay a $12,205.75 check to a construction company for his own benefit;
42.

On or about July 8, 2004, defendant FISHER caused defendant FSG to pay

a $1,159.88 check to a door company for his own benefit;
43.

On or about September 13, 2004, defendant FISHER caused defendant FSG

to pay a $7,651.76 check to a construction materials company for his own benefit;
44.

On or about October 11, 2004, defendant FISHER caused defendant FSG to

pay a $9,760.07 payment to a lumber company for his own benefit;
45.

On or about December 9, 2004, defendants FSG and FISHER paid and

caused to be paid a $11,318.30 check to a construction company for the benefit of a
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Fisher family member;
46.

On or about December 23, 2004, defendant FSG paid and caused to be paid

a $23,067.91 check to a construction materials company for the benefit of defendant
FISHER and Badlands;
47.

On or about April 15, 2005, defendant FISHER filed and caused to be filed

with the Internal Revenue Service a false and fraudulent U.S. Individual Income Tax
Return, Form 1040, for tax year 2004 that understated defendant FISHER's true and
correct income;
48.

On or about September 19, 2005, defendants FISHER, SCHAFF, and FSG

filed and caused to be filed with the Internal Revenue Service a false and fraudulent
consolidated U.S. Corporation Income Tax Return, Form 1120, for tax year 2004 that
overstated FSG and Subsidiaries' cost of goods sold and total deductions;
All in violation of Title 18, United States Code, Section 371.

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COUNTS TWO AND THREE
Making and Subscribing A False Tax Return
The Grand Jury realleges the Introductory Allegations as though fully set forth
herein and further alleges:
49.

On or about the following dates, in the District of North Dakota and

elsewhere,
MICHEAL L. FISHER
did willfully make and subscribe consolidated U.S. Corporation Income Tax Returns,
Forms 1120, for FSG and Subsidiaries, for the tax years set forth below, which were
verified by a written declaration that the income tax returns were made under penalties of
perjury and were filed with the Internal Revenue Service, and which said income tax
returns he did not believe to be true and correct as to every material matter, in that each
U.S. Corporation Income Tax Return fraudulently claimed business expenses and
deductions in the amounts set forth below, whereas defendant FISHER then and there
well knew and believed FSG and Subsidiaries did not incur business expenses and
deductions in the total amounts claimed:
Count

Date of
Offense

Tax Year

False Items

2

6/27/2002

2001

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$74,119,185
$938,495

3

4/20/2003

2002

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$73,034,625
$1,311,596

All in violation of Title 26, United States Code, Section 7206(1).
11

Amount
Claimed

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COUNTS FOUR AND FIVE
Aiding and Assisting in the Preparation and Presentation of a False Tax Return
The Grand Jury realleges the Introductory Allegations as though fully set forth
herein and further alleges:
50.

On or about the following dates, within the District of North Dakota and

elsewhere,
AMIEL SCHAFF
did willfully aid and assist in, and procure, counsel, and advise the preparation and
presentation to the Internal Revenue Service of consolidated U.S. Corporation Income
Tax Returns, Forms 1120, for FSG and Subsidiaries, for the tax years set forth below,
which were false and fraudulent as to a material matter, in that each U.S. Corporation
Income Tax Return fraudulently claimed business expenses and deductions in the
amounts set forth below, whereas defendant SCHAFF then and there well knew and
believed FSG and Subsidiaries did not incur business expenses and deductions in the total
amounts claimed:
Count

Date of
Offense

Tax Year

False Items

4

6/27/2002

2001

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$74,119,185
$938,495

5

4/20/2003

2002

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$73,034,625
$1,311,596

All in violation of Title 26, United States Code, Section 7206(2).
12

Amount
Claimed

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COUNTS SIX AND SEVEN
Aiding and Assisting in the Preparation and Presentation of a False Tax Return
The Grand Jury realleges the Introductory Allegations as though fully set forth
herein and further alleges:
51.

On or about the following dates, within the District of North Dakota and

elsewhere,
MICHEAL L. FISHER and
AMIEL SCHAFF
did willfully aid and assist in, and procure, counsel, and advise the preparation and
presentation to the Internal Revenue Service of consolidated U.S. Corporation Income
Tax Returns, Forms 1120, for FSG and Subsidiaries, for the tax years set forth below,
which were false and fraudulent as to a material matter, in that each U.S. Corporation
Income Tax Return fraudulently claimed business expenses and deductions in the
amounts set forth below, whereas defendants FISHER and SCHAFF then and there well
knew and believed, FSG and Subsidiaries did not incur business expenses and deductions
in the total amounts claimed:
Count

Date of
Offense

Tax Year

False Items

6

3/15/2004

2003

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$88,927,502
$1,378,745

7

9/19/2005

2004

line 2 - Cost of Goods Sold
line 26 - Other Deductions

$111,351,982
$1,814,990

All in violation of Title 26, United States Code, Section 7206(2).
13

Amount
Claimed

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COUNTS EIGHT THROUGH ELEVEN
Making and Subscribing A False Tax Return
The Grand Jury realleges the Introductory Allegations as though fully set forth
herein and further alleges:
52.

On or about the following dates, within the District of North Dakota and

elsewhere,
MICHEAL L. FISHER
did willfully make and subscribe U.S. Individual Income Tax Returns, Forms 1040, for
the tax years set forth below, which were filed electronically with the Internal Revenue
Service, and which were verified by a written declaration on a U.S. Individual Income
Tax Declaration for Electronic Filing, Form 8453, that the income tax returns were made
under penalties of perjury, and which said income tax returns he did not believe to be true
and correct as to every material matter, in that the said U.S. Individual Income Tax
Returns (1) reported total income in the amounts set forth below, and (2) claimed
charitable contributions on Schedule A, Itemized Deductions, in the amounts set forth
below, whereas defendant FISHER then and there well knew and believed that (1) he
received income in addition to the total income reported, and (2) he was not entitled to
claim total charitable contributions in said amounts, but in lesser amounts:
Count

Date of
Offense

Tax
Year

False Item(s)

8

6/27/2002

2001

line 22 - Total Income
14

Amount
Claimed
$583,309

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Count

Date of
Offense

Tax
Year

False Item(s)

9

4/15/2003

2002

line 22 - Total Income

$582,558

10

4/15/2004

2003

line 22 - Total Income
line 18 - Schedule A Itemized Deductions

$464,390

line 22 - Total Income
line 18 - Schedule A Itemized Deductions

$719,019

11

4/15/2005

2004

All in violation of Title 26, United States Code, Section 7206(1).
A TRUE BILL:

/s/ Grand Jury Foreperson
Foreperson

/s/ Drew H. Wrigley
DREW H. WRIGLEY
United States Attorney

CSS:tla

15

Amount
Claimed

$12,166

$9,136