Holly Damiani pleaded guilty to filing false tax returns with her then-husband, Jeffrey Wirth.
The ex-wife of real estate developer Jeffrey Wirth was sentenced Friday to three months in federal prison for her role in a case involving a wide-ranging tax fraud.
Holly Damiani, 53, who pleaded guilty to a single count of filing a false federal tax return, is expected to report to prison early next year.
In a plea agreement accepted by U.S. District Judge Ann Montgomery last May, Damiani admitted that she and her ex-husband, and their tax preparer, Michael James Murry, engaged in the fraud from 2003 to 2006.
She has subsequently cooperated with the government in its case against Wirth, who was sentenced last month to 4 1/2 years in federal prison and ordered to pay $6.45 million in restitution.
Wirth, former owner of Wirth Cos. and at least 30 other business entities, was the developer of the Grand Lodge Hotel & Waterpark in Bloomington and the Grand Rios Hotel and Water Park in Brooklyn Park. He also spent about $4 million renovating the Minneapolis Athletic Club into the luxury Grand Hotel in the city's central business district.
Damiani, who met Wirth when she was 16, was vice president of the Wirth Cos. from 1988 to 2006 and the company's chief financial officer from at least 2003 to 2006, when she and Wirth often recorded personal expenses as business expenses in an effort to understate the company's income for tax purposes, according to the U.S. attorney's office.
Despite maintaining a high-flying lifestyle that included worldwide travel and a home on Lake Minnetonka called the Isle of Windemere, the couple paid just $7,567 in federal income taxes between 2003 and 2006.
Court documents describe how Damiani's marriage to Wirth began to crumble as the company took off in the late 1990s. Although Damiani tried to leave her husband on several occasions, court papers say she felt tied to him emotionally and financially, and stayed in the marriage because of her children and religious beliefs.
As Damiani and her legal team prepared for trial last spring, she suddenly "stopped everything. I told my attorney I was guilty and that I could not go forward with this game anymore," court documents state.
At a hearing in U.S. District Court in Minneapolis on Friday, Damiani's attorney, Andrew Luger of Minneapolis, said his client "embarked on a new life" after leaving the company and her husband in 2006. He described Damiani as a devoted mother of three children and diligent business owner of Pairings Food & Wine Market in Minnetonka.
About two dozen family members, colleagues and friends attended the sentencing on Friday. "She is now a remarkably different person," Luger said.
Assistant U.S. Attorney William Otteson said he didn't disagree with Luger's assessment, but noted, "this is a serious crime, a very large tax crime. We are grateful for her assistance in the case."
Judge Montgomery said the crime "wasn't a single act of bad judgment; this went on for a period of time." Damiani and her ex-husband were living "a lifestyle funded by money that should have been paid as taxes." The two were divorced in 2008.
Still, Montgomery said she didn't believe Damiani would reoffend, and has led an "exemplary" life for the past six years.
The prison where Damiani will serve her term will be determined by the federal Bureau of Prisons, but Montgomery said she would recommend minimum- or low-security facilities in Waseca, Minn., or in West Virginia.
Janet Moore 612-673-7752