The indictment alleges that the Allens conspired to defraud the United States of assessing and collecting federal income taxes from 1998 through April 2009. The indictment further alleges that the couple evaded the payment of income taxes for the 1999 tax year and that they failed to file tax returns for tax years 2003 through 2006.

According to the indictment, Frederick and Kimberlee Allen have not submitted a tax return to the IRS since tax year 1999. The indictment alleges that the Allens concealed their income and assets from the IRS in numerous ways, including putting their residence in a trust, assigning their wages to third parties and using a third party to cash checks. The indictment also alleges that they obstructed and harassed the Internal Revenue Service by mailing frivolous documents to the IRS.

An indictment is merely a formal charge by the grand jury. Each defendant is presumed innocent unless and until proven guilty in U.S. District Court. If convicted, the defendants each face a maximum potential sentence of 14 years in prison and maximum fines of $900,000.

The case is being prosecuted by Tax Division trial attorneys Karen E. Kelly and Michelle M. Petersen. The case was investigated by the IRS Criminal Investigation Division.

Additional information about the Justice Department’s Tax Division and its enforcement efforts may be found at http://www.usdoj.gov/tax.

Sulfridge, 44, pleaded guilty to a two-count criminal information charging him with conspiracy to commit wire fraud and securities fraud, as well as tax evasion.

According to the plea agreement and evidence presented during the plea hearing, Image Entry, of London, Ky., is a data processing company that operated nearly a dozen facilities located in the Southeastern and Midwestern United States. Sourcecorp is a consulting and information management corporation located in Dallas that purchased Image Entry in March 2001.

According to the plea agreement and evidence presented during the plea hearing, the terms of the purchase agreement provided that in addition to the $33 million paid at closing, an additional sum of approximately $11 million would be held back and paid during the three succeeding years if Image Entry met its earnings targets. The purchase agreement also provided for additional incentive payments of up to $25 million during the three years that would be calculated based on the amount by which those earnings targets were exceeded.

According to the plea agreement and evidence presented during the plea hearing, Sulfridge and others conspired to fraudulently inflate Image Entry earnings in order to fraudulently increase those annual incentive payments by Sourcecorp. The total cost of the acquisition by Sourcecorp amounted to approximately $68 million, including the incentive payments.

Also according to the plea agreement and evidence presented at today’s hearing, Sulfridge allegedly caused a tax loss of $190,111 when he acted to evade income taxes due on approximately $592,393 in bonus compensation he was paid based on the fraudulently inflated earnings. According to the information, Sulfridge failed to report that income on the annual joint individual income tax returns he filed with the Internal Revenue Service (IRS) for tax years 2001, 2002 and 2004, and in May 2005 Sulfridge allegedly submitted a materially false income tax return to the IRS for tax year 2003.

At sentencing, Sulfridge faces a maximum penalty of five years in prison on the conspiracy count and five years on the tax evasion count. Sulfridge also faces a maximum fine of $250,000 on the conspiracy count and a maximum fine of $100,000 on the tax evasion count. A sentencing date has not yet been scheduled.

The case is being prosecuted by William H. Stapleton Jr., of the Criminal Division’s Fraud Section, James Etri of the U.S. Securities and Exchange Commission acting as a Special Attorney assigned to the Criminal Division, and by Jill M. Cassara of the Tax Division. The case is being investigated by the FBI and the IRS.