While awaiting sentencing for an illegal income tax scheme, a Prior Lake couple violated the conditions of their release by helping counsel clients at their Bloomington accounting and tax-preparation business, a federal judge ruled Monday.
After a daylong hearing Monday, U.S. District Judge David S. Doty ordered Ornella Angelina Hammerschmidt to be held in jail until her sentencing, stating she may have committed "another federal offense" by assisting an undercover IRS agent to file a fraudulent tax return in February.
Doty placed her husband, Mark Hammerschmidt, on home monitoring with orders to cut ties with Pro Tax RX, the business that he ran with his wife.
The couple pleaded guilty in November to charges that stemmed from a lengthy investigation of their immigration services and tax preparation business, American Group US Inc., which operated from offices in Shakopee and Winter Garden, Fla.
Mark Hammerschmidt faces up to nine years in prison and must pay $1.8 million in restitution.
Ornella Hammerschmidt, a native of Venezuela, faces up to 21 months in prison, $45,000 in restitution and possible immigration sanctions.
Doty said that in 29 years as a judge, he had never presided over such a complex evidentiary hearing on whether to revoke a defendant's conditional release pending sentencing.
Marissa Pitzen, an IRS agent who coordinates criminal investigations into tax-refund fraud, testified that the Hammerschmidts had been under investigation for many years over questionable tax-preparation practices.
Pitzen said an inquiry from a Star Tribune reporter and others about the Hammerschmidts' activities at Pro Tax prompted the agency to review the tax returns filed from their Bloomington business. The data analysis led to the undercover operation.
Defense attorney Jean Brandl, representing Ornella Hammerschmidt, called two Pro Tax employees to testify that they had never seen the defendants counseling tax customers. They said the couple confined their activities to accounting and payroll activities, which Brandl argued were allowed under the terms of their release.
Ornella Hammerschmidt said she had misunderstood the conditions of pre-sentencing release and begged Doty to let her go home to care for her 10- and 12-year-old children.
"This shouldn't be my last chance," she said.