Bus Company Owner Charged with Federal Tax Violations for Failing to Report Earnings from Chicago Schools
Thursday, September 22, 2016
CHICAGO — The owner of a transportation company that bused Chicago public school students spent corporate money to purchase and renovate a $500,000 home in the city’s Oakland neighborhood and illegally deducted the funds in U.S. tax filings, according to a federal indictment unsealed today.
JEWEL LOCKHART, the owner and president of Chicago-based Jewels Bus Co., is charged with one count of impeding the Internal Revenue Service, and six counts of willfully filing false tax returns. Lockhart, 71, of Chicago, will be arraigned in U.S. District Court on a future date to be determined by the Court.
From 2008 to 2013 Jewels Bus Co. contracted with Chicago Public Schools to provide daily bus service for its students. The company also provided service to various other clients, including individual CPS schools, for special events. The special event fees collected by the company were deposited into a separate bank account than the fees collected from CPS.
The indictment alleges that from 2009 to 2011 Lockhart concealed income from Jewels Bus Co.’s tax return preparer by failing to record the special events income in company books. Lockhart transferred money from the bus business to a company controlled by a relative, who used it to purchase a $500,000 home in the 800 block of East Oakwood Boulevard in Chicago’s Oakland neighborhood, according to the indictment. Lockhart and the relative, who isn’t named in the indictment, spent more than $600,000 in Jewels Bus Co.’s money to renovate the house, the indictment states. Lockhart later became a joint tenant in the home and used it as her personal residence, according to the indictment. Lockhart concealed the scheme by telling Jewels Bus Co.’s tax return preparer that the transferred funds and the renovation costs were tax-deductible corporate expenses, even though she knew the money was spent for her personal gain, the indictment states.
The indictment further alleges that Lockhart lied to an IRS officer during an interview in 2012 about Jewels Bus Co.’s alleged failure to remit all of the employment taxes it owed. Lockhart falsely stated that CPS was the company’s only client, without mentioning its numerous other customers.
For the calendar years 2009 through 2011, Lockhart reported to the IRS that Jewels Bus Co.’s corporate income was more than $30.8 million, the indictment states. In fact, Lockhart knew that the corporation’s total income for those years substantially exceeded that amount, according to the indictment. For the same three-year period, Lockhart reported individual earnings of more than $1.1 million. The indictment alleges that her actual personal income during that time substantially exceeded that amount.
The indictment was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; James D. Robnett, Special Agent-in-Charge of the Chicago Office of the Internal Revenue Service Criminal Investigation Division; Michael J. Anderson, Special Agent-in-Charge of the Chicago Office of the Federal Bureau of Investigation; Nicholas J. Schuler, Inspector General for the Chicago Public Schools; and Thomas D. Utz Jr., Special Agent-in-Charge of the U.S. Department of Education Office of Inspector General.
Each count of the indictment is punishable by up to three years in prison. If convicted, the Court must impose a reasonable sentence under federal statutes and the advisory U.S. Sentencing Guidelines.
The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and is entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.
The government is represented by Assistant U.S. Attorney Steven Block.