The husband of a former U.S. Tax Court judge has pleaded guilty to making nearly $1 million in fraudulent deductions on tax returns over much of her tenure on the bench and making several lavish purchases in that time through his consulting firm.
Robert Fackler, 63, of Minnetonka, who is in the process of divorcing Diane Kroupa, 60, admitted Friday in federal court in St. Paul to obstruction of an IRS audit in connection with allegations spanning from 2004 to 2010.
The couple allegedly understated their personal income by about $1 million and the amount they owed in taxes by at least $400,000, according to the charges against both of them. The case against Kroupa is still pending.
Kroupa, who was appointed to the court in 2003 and retired in 2014, and Fackler were accused in April of fraudulently deducting at least $500,000 of personal expenses they listed as expenses at Fackler’s consulting firm, and another $450,000 in purported business costs for which clients had reimbursed Fackler.
Expenses labeled as business costs for Fackler’s Grassroots Consulting instead went toward Pilates classes, wine club fees, Chinese tutoring, jewelry and airline flights to Alaska, Australia, the Bahamas, China, England, Greece, Hawaii, Mexico and Thailand.
Kroupa, meanwhile, also did not report a $44,520 real estate transaction, instead claiming it was part of an unrelated inheritance.
Kroupa was born in South Dakota and practiced tax law at Faegre & Benson in Minneapolis before being appointed as a judge to the Minnesota Tax Court and later to the U.S. Tax Court in Washington, D.C.
The couple owned homes in Plymouth, Minn., and Easton, Md., where Kroupa stayed while presiding as a judge. She retired four years before her 15-year term was to end. At least one news report said she oversaw cases involving a Bernie Madoff-linked tax dispute.
Kroupa and Fackler, whose divorce proceedings started two months after they were indicted, claimed to be financially insolvent when they knew they had “substantial assets that exceeded their liabilities,” according to the indictment. They also allegedly concealed records that would have revealed fraudulent deductions when filing tax returns, and the Internal Revenue Service issued a notice over a lack of documentation of their business expenses.