In Missoula Federal District Court this week, 43-year-old Melissa Horner was sentenced to nearly three years in prison and must pay $2.8 million in restitution to the Internal Revenue Service.

Instead of paying the IRS the employee and employer taxes owed by H&H Earthworks, a Bozeman construction company of which she was a co-owner, Horner instead used the money to purchase home renovations and recreational vehicles.

We spoke to Special Agent in Charge for Internal Revenue Service Criminal Investigations Andy Tsui about the case.

“This case is basically an employment tax fraud case, and that's one of the types of investigations we conduct where employment taxes are being either withheld and not paid over in criminal violation of tax statutes,” said Agent Tsui. “So in this case, it's the kind of case that we're seeing more and more of these days where a business is withholding employment taxes, and then not paying them over to the IRS.”

Tsui said the fraudulent activity wasn’t just a one-time event, but continued for several years.

“The investigation uncovered multiple years of this activity and in the sentencing, the restitution amount was just over $2.8 million,” he said. “So that's the amount that was documented in the case of the employment taxes and withholdings that were not paid over to the IRS, but that was also it was withheld from the employees.”

Why a sentence of fewer than three years for defrauding the IRS of nearly $3 million? Tsui said the restitution will act as a deterrent after Horner completes her federal prison sentence.

“So the prison term is appropriate as within the expectations that we all had for this case. And I think what kind of balances the deterrent effect of this case is the large restitution amount of $2.8 million. That is the restitution amount to the IRS.”

Tsui said Horner presented a large check to the IRS at her sentencing, indicating her willingness to make amends.

“During the sentencing, she did provide a check to the government to start the restitution payment process and that amount was just over $200,000,” he said. “So I think this case and the sentencing has had a great impact and for her taking responsibility for those actions,” he said.  “Taking the first step towards restitution is a great sign of how serious this crime is, and also that she is also taking responsibility for it.”

H & H Earthworks, Inc. is a Belgrade-based, family-owned, commercial site-development business, and Horner managed the company’s finances. The company employed between 20 and 60 persons from 2014 through 2019.

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