The co-owner of H & H Earthworks, Inc., in Belgrade was sentenced Wednesday to 30 months in prison plus three years of supervised release for not paying the IRS more than $2.8 million in employer and employee taxes, using the money on personal expenses.

Melissa Lynne Horner, 43, of Bozeman, pleaded guilty in April for failing to account for and pay withholding and FICA taxes and failing to file employer's quarterly return and pay tax.

From March 2014 through 2019, Horner used Earthworks to pay for hundreds of thousands of dollars of personal expenditures instead of paying the funds to the IRS payroll tax. She spent more than $100,000 on motorsport vehicles, $90,000 to a real estate title company in Bozeman and at least $50,000 on home renovations and $20,000 to purchase a motorhome.

A judge ordered three years of supervised release after Horner’s prison time, plus $2,878,522 in restitution, and she was ordered to self-report to the Bureau of Prisons.

The Department of Justice released the following information:

The co-owner of H & H Earthworks, Inc., was sentenced today to 30 months in prison after she admitted to failing to pay the IRS more than $2.8 million in employee and employer taxes, and instead, spent some of the money on personal expenses, including home renovations and recreational vehicles, U.S. Attorney Jesse Laslovich said.

Melissa Lynne Horner, 43, of Bozeman, pleaded guilty in April to failure to truthfully account for and pay over withholding and F.I.C.A. taxes, a felony, and to failure to file employer’s quarterly return and pay tax, a misdemeanor.

U.S. District Judge Dana L. Christensen presided. Judge Christensen also ordered Horner to serve three years of supervised release following incarceration and to pay $2,878,522 restitution. Horner was allowed to self-report to the Bureau of Prisons.

“Those who evade our federal and state tax laws by cheating taxpaying Americans out of their hard-earned dollars, especially those who are entitled to their Medicare and Social Security payments, will be held accountable for their criminal conduct. Horner’s sentence shows that those who fraudulently refuse to pay taxes that every employer is required to pay will face criminal prosecution by our office. The people of our state and nation deserve nothing less,” U.S. Attorney Laslovich said.

“Business owners have an obligation to their employees and the IRS to pay over payroll and employment taxes,” said Andy Tsui, Special Agent in Charge, IRS Criminal Investigation Denver Field Office. “By withholding these taxes for her personal gain Ms. Horner not only defrauded the federal government, but also all honest taxpayers, and today’s sentencing is a direct reflection of the seriousness of her crime.”

In court documents filed in the case, the government alleged that H & H Earthworks, Inc., is a Belgrade-based, family owned, commercial site-development business, and that Horner managed the company’s finances. The company employed between 20 and 60 persons from 2014 through 2019.

For approximately five years, beginning in March 2014 through 2019, Horner had Earthworks pay hundreds of thousands of dollars of expenditures for her personal benefit instead of paying over to the IRS payroll tax required to be withheld from Earthworks’ employees’ paychecks. Horner used the money for personal expenses, including, more than $100,000 on motorsport vehicles, $90,000 to a real estate title company in Bozeman, at least $50,000 on home renovations and $20,000 for a motorhome.

The government further alleged that Horner withdrew Federal Insurance Contribution Act (FICA) taxes from the wages paid to Earthworks employees and failed to pay over the trust fund taxes to the IRS. Horner also failed to pay over Earthworks’ portion of the FICA taxes (Federal Income, Social Security and Medicare taxes). In addition, Horner failed to file quarterly Forms 941, Employer’s Quarterly Federal Tax Returns, prior to being notified of the criminal investigation. Horner knew she was required to pay over the employment taxes and file the quarterly Forms 941 and willfully chose to violate this obligation.

Assistant U.S. Attorney Karla E. Painter prosecuted the case, which was investigated by the IRS Criminal Investigation.