GRAND RAPIDS, Mich. — A Byron Center man will spend almost two years in federal prison after admitting to evading hundreds of thousands of dollars in taxes over more than a decade.
James Phillips Scholten, 51, was sentenced to 20 months behind bars by U.S. District Judge Jane M. Beckering. He was also ordered to pay $868,707 in restitution to the IRS and will serve three years of supervised release once he leaves prison.
Federal prosecutors say Scholten knowingly concealed $3.4 million in income generated through the sale of stolen scrap material over a 13-year period. According to court records, Scholten took highly valuable scrap metal from his employer, sold it, and kept the proceeds for himself.
Investigators say Scholten deliberately withheld records of this recycling income from his CPA to avoid paying taxes on the money. In 2021, Scholten reported that he owed just $2,465 in federal income tax. In reality, prosecutors say, he earned an additional $610,818 from scrap recycling that year — generating an extra $172,618 in taxes he failed to pay.
"Cheating on your taxes is not only illegal, it is also not worth the risk," said U.S. Attorney for the Western District of Michigan Timothy VerHey. "Scholten knew he owed a lot of money to the government, had the money to pay, but decided to keep it for himself. Now he is going to prison and will have to pay his taxes anyway," VerHey said.
The case was investigated by IRS Criminal Investigation, the law enforcement arm of the Internal Revenue Service, and prosecuted by Assistant U.S. Attorney Chris O’Connor.
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