No prison for Kenmore man convicted of mail fraud and tax evasion for investment scheme

Sentencing guidelines for Michael MacPherson's mail fraud and tax evasion convictions set a range of 18 to 24 months in prison, but the judge instead imposed a one-year term of supervised release and restitution.

"I don't feel a sentence of imprisonment will serve any purpose," said U.S. District Court Judge Richard Arcara.

The judge cited MacPherson's remorse, lack of criminal history, medical condition and strong support from family and friends among the reasons for keeping him out of prison. 

In 2017, MacPherson solicited a $75,000 investment from a Kansas resident, proposing to purchase discount cigarettes from a Native American tribe and resell them at a markup. MacPherson did not buy the cigarettes and spent the money instead on personal expenses, prosecutors said.

MacPherson later received $20,000 more from the person for a purchase of carbon fiber, promising a 30% return in 180 days. Again, MacPherson used the money for personal and business expenses such as airline flights, car rentals, gas, groceries, restaurants and hockey tickets, according to the U.S. Attorney's Office.

In addition, MacPherson failed to file a federal income tax return for 2015, despite an income of $265,254, and he understated his gross business receipts for 2017 by $80,156, evading $93,815 in federal taxes, according to court papers.

MacPherson, 57, who trades in industrial materials, has made full restitution to the Kansas business partner, his lawyers said in court.

"We paid him back every nickel," said attorney Joel Daniels, who with Cheryl Meyers Buth represented MacPherson.

MacPherson also turned over a check Thursday to pay the back taxes, but still owes $31,858 in interest charges and faces an undetermined IRS penalty that could exceed $70,000. 

In court papers, Assistant U.S. Attorney Charles Kruly said MacPherson sought to give the impression that he used the $95,000 to make ends meet.

MacPherson’s letter to the court blamed his fraud on the fact that his “business was very slow” and that he was “not making very much money.”

"But the evidence does not entirely support that suggestion," Kruly said.

MacPherson used more than $5,000 to pay for a country club membership, and spent about $15,000 for flights, hotels, car rental, retail purchases, gas, clothing, groceries and hockey tickets, Kruly said. There's no accounting for the $8,000 in checks he wrote to himself nor the more than $7,000 in cash withdrawals, Kruly said.

"This is not, then, a defendant who defrauded a victim to ensure that he could put food on the table for his family," Kruly said.

In remarks to the judge, Daniels described the spending, even the Niagara Falls Country Club membership, as expenses in pursuit of business deals – not for him and his family to order cocktails and use the swimming pool at the club.

The people he was seeking to do business with "like to play golf," Daniels told the judge, "and he used the golf course with individuals to encourage them to do business with him."

The deals did not go through, Daniels said.

Other expenses dealt with pursing business deals in Florida, he said.

As for the hockey tickets, "that's something he regrets," Daniels said.

"Almost all of the money went for some form of business-related expenses," Daniels said. "He didn't take the guy's money and go to the casino."

As for the tax evasion, at a time when he could not pay his tax bill, "he took the wrong path; he chose not to file," Daniels said.

MacPherson apologized to the business partner he swindled and taxpayers. He also apologized to his family members and business associates, saying the three years he's been under investigation have been "pretty rough" on them.

"I'll spend the rest of my life trying to make good on everything," MacPherson told the judge.

The U.S. Attorney's Office agreed MacPherson's health condition – he's had four hip replacement surgeries and has had a recurring infection – and what appears to be his otherwise commendable life were factors for the judge to consider. But the government said that doesn't excuse his criminal conduct, calling deterrence “especially important.”

Arcara suggested that MacPherson "pay all the debt you owe and put this behind you and go on with your life."

The judge added, "You've got some shame here you're going to have to live with."