Linda Abramson-Schmeiler is going to prison for tax evasion.

But before she becomes a federal inmate in June, she’s fighting back.

The Monument woman and her husband, a Colorado Springs police officer, recently created a website that argues she’s the victim of an IRS investigation run amok.

The website repeats much of the testimony that she and her husband, Joe Schmeiler, gave in October during a nearly two-week trial in U.S. District Court in Denver.

On the witness stand, they claimed that the investigation grew out of a feud with her in-laws, that she made no profit on the $1.6 million of unreported revenue and that she bankrolled her hair care products business with more than $1 million in cash she found in her late parents’ Colorado Springs home.

The jury didn’t buy that defense and found her guilty on all five counts.

Judge Robert E. Blackburn also wasn’t persuaded. When he sentenced Abramson-Schmeiler on March 17 to three years in prison, the judge suggested that she had committed perjury and convinced others to do likewise. He also ordered her to pay $709,672 in restitution to the IRS plus a $7,500 fine.

Undeterred, the couple recently launched a website called InLindasWorld.com. The title comes from a phrase that Assistant U.S. Attorney Kenneth M. Harmon used repeatedly as he challenged the credibility of her story.

 

A box of money

That story traces back to a night in July 1975, when her father, Milton Abramson, was stabbed to death at Fort Carson while driving a cab. He was killed for $7 and the slaying remains unsolved.

Linda Abramson was 15 at the time. During her trial, she described how the trauma of her father’s death affected her. She recalled how she picked up her mother’s wary attitude about telling anyone how much money they had.

When her mother, Lillian, died of a stroke in 1989, it fell to Linda to clean out her parent’s modest home. Inside, she testified that she found cash stuffed in her father’s suit pockets, government bonds from the 1940s in a kitchen drawer and a box of cash. All told, it was just over $1 million.

Unsure what to do with the money Abramson-Schmeiler said she put the cash in a box and slid it under her bed.

In 1990, Linda Abramson met Joe Schmeiler and later they married. A few years later, when Linda was pregnant with twins, they decided to look for a new home. She had found a place in Monument that Joe Schmeiler felt was out of their price range. That’s when he testified she showed him a box full of $100 bills in bundles of $50,000.

 

A gray market

At the time, Abramson-Schmeiler owned a salon in Colorado Springs called Hair Drama. In 2000, she said a man came into the salon and offered to buy all of her inventory of hair care products.

That’s how she became involved in what prosecutors called a “gray market” of reselling hair care products outside the network of authorized distributors. The practice is legal, the couple said and it was not the subject of her criminal case.

Prosecutors, however, said Abramson-Schmeiler failed to report $1.6 million of the $7.7 million in gross revenue that her business took in between 2002 to 2005.

Because the hair care products involved mostly cash transactions, Abramson-Schmeiler testified that she used the money she had inherited to build her business. Because she did not make a profit on $1.6 million she put into buying product for the business, she considered it a “wash” and did not report the money as income, she said.

“We’re not tax protestors,” Joe Schmeiler said. “She did what you should do in America, which is work hard and get ahead.”

The couple questioned why the IRS did not first request an audit or deal with it as a civil matter.

Jeff Dorschner, a spokesman for the U.S. Attorney’s office confirmed there was no audit, but said there was a reason for that.

“Some criminal tax cases are so blatant and egregious that there’s no point to proceed with an audit,” he said.

 

A family dispute

The couple testified that Linda Abramson-Schmeiler’s tax troubles can be traced to a family dispute that flared on Christmas Eve 2004.

Up until that time, they had a habit of bringing their twin children to the home of Joe’s father Albert Schmeiler and his wife Peggy.

But Joe Schmeiler said he had been dealing with some behavior problems with his teenage son. At a Christmas Eve gathering at the grandparents’ house, The teen said something his father considered inappropriate. He took the youngster into another room and chewed him out.

That led to words between Joe and Peggy Schmeiler, which in turn led Albert Schmeiler to tell his son and daughter-in-law to leave, which they did.

From that point on, Joe and Linda refused to leave their kids with the grandparents unless either Joe or Linda was there.

That prompted Albert and Peggy Schmeiler to go to court, seeking to assert their visitation rights as grandparents. The judge ruled against the them.

Exactly who triggered the IRS investigation is in dispute.

Joe Schmeiler said among the documents obtained while preparing for his wife’s defense was an IRS reward application signed on June 21, 2005, by Peggy Schmeiler.

Albert Schmeiler insists they did not turn his son and daughter-in-law in, but responded when the IRS came to their home.

“No. This is absolutely not true. This is an assumption on their part,” Albert Schmeiler said.

Albert Schmeiler said he and his wife are not interested a reward. If there is one, they will donate it to the Humane Society, he said.

 

A car pursuit

Prior to getting a letter from the IRS formerly notifying Linda that she was the target of an investigation, Abramson-Schmeiler testified that people would come to the door of her Monument home and knock. She wouldn’t answer. They never left a card, she said.

One day, when she saw two people she didn’t know outside, she drove away and headed toward Colorado Springs. Along the way she first tried to reach her husband by phone. When she couldn’t reach him, she called a family friend who is also a Colorado Springs police officer.

He dispatched a patrol car to check on what was happening. When the police arrived, she said, the car left.

Prosecutors dispute Abramson-Schmeiler’s story. They contend she drove by the IRS investigators when they displayed their badges near her home.

The letter followed after agents were unable to contact her, they said.

 

The trial

During the trial, Linda Abramson-Schmeiler recounted the entire story, her father’s death, the hidden money, the box with cash, the dispute with the grandparents, the car pursuit.

On cross-examination, the prosecutor, Harmon, challenged her credibility on several points, including the existence of the $1 million in cash found in her parent’s home and her claim that she sunk the money into a hair care products business that by her estimate managed to eke out a 3 percent average annual profit.

“So the rest of this money, this almost one million dollars in cash, got used year after year after year after year to sink into a business that got you three cents on the dollar back?” Harmon asked. “Is that your testimony?”

“Yes,” Abramson-Schmeiler replied.

“And your testimony is that you couldn’t find any better use of that money?” Harmon asked.

“Well, I had no…” she replied.

“That’s a yes or no ma’am,” he said.

Harmon also questioned why — if she did find all that money in her parent’s home — she didn’t pay inheritance taxes on it.

Abramson-Schmeiler said she felt she didn’t have to because half came from her father and half from her mother.

But Harmon reminded her that she inherited all of the money from her mother.

The jury took a bit more than an hour to find Abramson-Schmeiler guilty.

Prosecutors simply don’t believe Abramson-Schmeiler’s claim of having inherited $1 million from her parents.

Said U.S. attorney’s spokesman Dorschner: “Do we believe that $1 million magically appeared in the home? No.”

But Abramson-Schmeiler and her husband stand by the story that the money was real.

It’s also gone, she testified. Between the hair care products business and legal bills, there’s nothing left, she testified.

“I’m not anti-tax or anti-government,” the website quoted her as saying. “But I do believe this system is beyond an outrage, it is immoral.”

Her attorney has filed a notice of appeal. Abramson-Schmeiler is due to report to prison by June 26.

For more on this story, visit “The Sidebar” blog at gazettedev.gazette.com

 

 

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