Kernersville man sentenced to prison and ordered to pay $956,028 for filing false tax returns


Date: May 15, 2023


Greensboro, NC — A local man was sentenced in federal court today for filing false tax returns. U.S. District Court Judge William Osteen, Jr. sentenced Brandon Michalak to 15 months in the Federal Bureau of Prisons. Michalak was ordered to pay restitution of $956,028 in tax loss to the IRS.

In January of 2023, Michalak pled guilty to two counts of filing a false tax return, a violation of Title 26, United States Code, Section 7206(1).

According to court filed documents, Michalak was part-owner of a metal recycling business known as Sarah's Recycling that specialized in the collection and bulk resale of used catalytic converters. Michalak operated the business from his home in Forsyth County, North Carolina. The investigation revealed that during the years 2014-2018, Michalak omitted $11,022,953 in sales generated by his catalytic converter business. Each year, Michalak reported minimal taxable income and claimed the Earned Income Tax Credit, which is a refundable credit designed to provide relief for low- to moderate-income working people. Simultaneously, Michalak led a lavish lifestyle that included home and property purchases without financing, home renovations, pool installation, extravagant jewelry purchases in cash, and at least 20 vehicle purchases for himself and family members. As an example, he paid approximately $136,788 in cash for the purchase of a 2018 BMW Alpina.

"Honest, hardworking citizens should be appalled by the conduct of the defendant in this case," said United States Attorney Sandra J. Hairston. "Tax evasion hurts all of us, and we will aggressively prosecute anyone who willfully files false tax returns or fails to pay their fair share of taxes, especially in egregious cases like this."

"The license to run a business is not a license to avoid paying taxes," said Internal Revenue Service Criminal Investigation, Charlotte Field Office, SAC Donald "Trey" Eakins. "The defendant's misconduct, hiding income, and having his business pay his personal expenses, cheated all Americans who pay their fair share for the government services and protections that we enjoy."

Sandra J. Hairston, U.S. Attorney for the Middle District of North Carolina, made the announcement after U.S. District Judge William Osteen, Jr. sentenced Michalak. The Internal Revenue Service-Criminal Investigation investigated the case and Assistant U.S. Attorney Clifton T. Barrett prosecuted the case.