CLEVELAND - Details for a plea agreement between the U.S. Government and Melissa Snively-Pallard, the former Timberlanes Restaurant and Motor Inn owner and general manager, were released Wednesday.
Snively-Pallard, a former Salem resident whom court records show currently resides in New Springfield, faces up to five years in prison and a fine of up to $250,000 after pleading guilty to two of seven counts of a federal income tax indictment in Cleveland last week.
She will be sentenced at 11:30 a.m. on April 25.
Craig Casserly, a spokesperson for the Internal Revenue Service, said Snively-Pallard's pleading constituted "two counts of failure to account for and pay over employment taxes."
The case was before Judge Patricia Gaughan and prosecuted by Assistant United States Attorney John M. Siegel, following an investigation by the Internal Revenue Service criminal investigation unit in Akron.
The 17-page plea agreement says Snively-Pallard, 33, also known as Melissa Snively and Melissa Pallard, was the owner, president, CEO and general manager of Timberlanes and that for the seven calendar quarters, from the second quarter of 2006 through the end of 2007, she failed to report and pay to the Internal Revenue Service federal employment taxes of $234,466 on a total of $1.1 million in wages paid.
An additional stipulated employment tax liability and payment schedule show that for the quarter ending in Dec. 2003 there was $27,322 of unpaid taxes on $130,566 in wages while during the first two quarters of 2004 a total of $53,942 in taxes was paid on $247,246 in wages.
According to court documents, she made no employment tax payments and filed no employment tax returns for Timberlanes, with the exception of the fourth quarter of 2005.
The plea agreement said that an account in the name of the Melissa Snively Family Trust (MSFT), in which she was the grantor, co-trustee, and beneficiary, was formed "in approximately May of 2002."
Court documents said from Jan. 1, 2005, after she resigned as co-trustee, Snively-Pallard remained trustee and beneficiary and controlled all of the trust's bank accounts.
In 2005, she changed the Timberlanes banking practices to stop using bank accounts in the name of Timberlanes for deposits and expenditures.
"Instead," the court documents said, "corporate receipts were either deposited directly into bank accounts in the name of the MSFT or transferred to such accounts after being deposited into Timberlanes bank accounts.
"The defendant then used one of the MSFT accounts to issue payroll checks to Timberlanes employees."
Court documents said the payroll checks were prepared and recorded in QuickBooks initially through an outside accountant, but later in 2005 the job was assigned to the internal Timberlanes accounting.
"Every two weeks, the accounting department prepared payroll checks, each having an attached pay stub listing the tax withholdings" and Snively-Pallard signed them but over time she periodically had payroll department employees sign the checks when she was unavailable.," the agreement said.
A pro-forma check on blank paper "showing the amount of the federal tax deposit that needed to be made to pay the withholding and employer's share of FICA taxes due for the payroll period" was provided to Snively-Pallard who kept responsibility to make the deposits herself "but failed to do so" except for the last quarter of 2005.
The MSFT also failed to provide statements to Timberlanes accounting personnel making them unable to reconcile bank accounts.
Also recorded were documents showing that between 2005 and 2007 Snively-Pallard did not take any formal salary from Timberlanes.
"(The) Defendant, however, used the MSFT and Timberlanes bank accounts to make substantial personal expenditures, both by direct payments and by withdrawing cash through ATM debit card transactions.
"Direct payments included purchases of personal items, expenditures on trips to Las Vegas and Mountaineer Gaming Resort in West Virginia and payments on the purchase of a condo unit is Las Vegas."
From 2005 through 2008 there were $239,109 in personal expenditures including $94,401 of ATM cash withdrawals and related fees.
As part of the plea agreement, Snively-Pallard will file quarterly employment tax returns for the eight consecutive quarters ended Dec. 31, 2003 through Sept. 31, 2005 and the nine consecutive quarters ended on March 31, 2006 through March 31, 2008.
The court may also order her to pay restitution to the IRS for the Timberlanes' unpaid employer's share of of employment taxes from Dec. 31, 2003 through March 31, 2008.
Last March, Snively-Pallard's father, Wade C. Snively of Canton, was charged in the Northern District of Ohio federal court with three counts of filing false income tax returns, two counts of corruptly endeavoring to obstruct and impede the due administration of the tax laws, and three counts of bankruptcy-related offenses.
Larry Shields can be reached at firstname.lastname@example.org