LANSING, Mich. — East Lansing developer Scott Chappelle has plead guilty to tax evasion.
Chappelle owned Terra Management Company, Strathmore Development Company Michigan LLC, and Terra Holdings LLC, all of which were involved in real estate development and property management in East Lansing.
Chappelle worked for years to get a project called Center City II off the ground. The project ultimately failed and the Graduate Hotel and the Abbot now stand on the downtown East Lansing corner where it was meant to go.
Chappelle admitted he did not pay the IRS employment taxes withheld from the wages of his companies' employees.
When the IRS tried to collect the unpaid taxes, Chappelle made false statements about his companies' assets and income, his vacation home on Lake Michigan and purchased property in what are called "nominee names," basically meaning another entity held the ownership stake on his behalf.
Chappelle also said he couldn't afford to pay his tax debt, but was using business bank accounts to make mortgage payments on two houses, a condominium in East Lansing, college tuition for his children, personal credit card bills, life insurance premiums, car payments and expenses associate with his boats.
Chappelle also filed a false employment tax return in which he claimed Terra Holdings LLC had no employees and paid no wages during the time period covered by the return. Chappelle knew the company had employees and paid wages during that period.
Chappelle did not immediately respond to a request for comment.
He faces a maximum of five years in prison for tax evasion and a period of supervised released, restitution and monetary penalties.
Chappelle is scheduled to be sentenced on Aug. 2.
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