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Crime & Courts

Couple who ‘willfully’ didn’t pay taxes sentenced to 12 months in federal prison

  • Author: Zaz Hollander
  • Updated: October 6, 2018
  • Published October 5, 2018

An influential Klawock couple who failed to pay hundreds of thousands of dollars in federal income taxes on money they made from their commercial fishing venture were sentenced to 12 months in federal prison Friday in Juneau, according to the U.S. Attorney's Office.

Archie W. Demmert III, 58, and Roseann Demmert, 61, entered a plea deal that includes $145,220 as restitution for unpaid taxes in 2011, 2012, 2013 and 2014, according to the plea agreement filed in May.

The couple was originally charged in July 2017.

Federal prosecutors portrayed the couple as tax cheats who gambled and traveled while they avoided government intervention.

Their lawyers, however, described them as caring parents battling their children's addiction and asked for no prison time.

Attorney Kevin Higgins said incarceration, rather than probation, could cost Archie Demmert his 58-foot wooden seiner, the Emerald Beauty, and the loss of income could cost the family their home.

Archie Demmert is listed as a member of Klawock Cooperative Association, a tribal organization in the Southeast Alaska town of about 750 people. Roseann Demmert sat on the school board and became tribal president, securing the vote to get an Indian gaming license, "which in turn enabled them to support the tribal citizens," according to a letter from her daughter to the federal judge in her parents' case.

The couple has four children, two of whom "have significant ongoing legal and substance abuse challenges that have consumed much of the Demmerts' attention and financial resources over the years," Roseann Demmert's attorney wrote in a sentencing memo. Their oldest daughter is in a substance abuse program in Anchorage and their son, Curtis, is incarcerated.

Curtis Demmert lost his vessel, nets, skiff and gear in a January sentence after he was caught fishing for salmon in an area near Prince of Wales Island that's been closed to fishing for almost 30 years.

The couple's attorneys argued that a poor fishing season this year, coupled with damage to the boat, put them in precarious financial straits.

"A loss of income would undoubtedly cause them to miss mortgage payments and put their family home at risk of foreclosure," Higgins wrote in his sentencing memo. "Mr. Demmert has lived his whole life in a village where the residents depend on fishing to survive. There is no other real economic opportunity available to him."

But federal prosecutors say the Demmerts didn't behave frugally in past years, according to their depiction in court documents.

Until a federal judge barred them from going to casinos in May, the couple gambled extensively while avoiding paying their taxes, according to a sentencing memo filed by federal prosecutors.

Both had commercial fishing permits for herring spawn on kelp. Archie Demmert had an additional commercial fishing permit for a salmon purse seine.

"The Demmerts have successfully stalled IRS collection efforts until after the ten-year statute of limitations expired on collection efforts for many years in which they had taxes due," the memo states. "From 1994 to 2004, the Demmerts owed $239,648 that they never paid and that the IRS had to write off as uncollectable."

Meanwhile, the couple hit casinos — winning thousands of dollars — and took trips to California wine country, federal prosecutors say.

Roseann Demmert won over $20,000 from a casino in 2011 but two days later told the IRS the couple couldn't make any tax payments, the memo says.

In 2013, the Demmerts agreed to settle their tax liabilities by paying $80,000, according to the document. Then Archie Demmert withdrew $84,000 from their bank account, telling a bank teller he "was preventing the IRS from taking his money" and told the IRS they had no ability to pay, the memo states. "Soon after, the Demmerts were back gambling at casinos in Las Vegas and Washington, despite telling the IRS they had no way of paying their tax debt."

The IRS in April 2014 demanded full payment of $584,000 in taxes and penalties, the memo says. Over the next six months, the couple spent about $56,000 on travel, entertainment, casinos and paying their credit card bills.

As of Monday, the Demmerts had made no effort to file returns, pay taxes, or seek an extension for calendar years 2015, 2016, or 2017, or make estimated payment of taxes for 2018, according to the memo.

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