The Department of Justice recently issued a press release (click here to see it) announcing the indictment of a Bakersfield man, Michael Galloway, who owned the Catholic website www.Catholic.org., known as Catholic Online. According to the press release, the Department of Justice has alleged (remember, all defendant’s must be presumed innocent until proven guilty) the following:
A federal grand jury brought the four-count indictment [the last week of May, 2014], and it was unsealed [June 5, 2014] after the arrest.
Michael Galloway, 59, of Bakersfield, owns and operates the website for Catholic Online. According to court documents, Galloway generated revenue by selling advertising and hosting to faith-based businesses.
For tax years 2003 through 2006, the indictment alleges that Galloway improperly deducted personal expenses as business expenses, including his homeowner’s association fees for his personal residence, car payments and insurance, utilities and cable service for his personal residence, department store credit card bills, tile work, and personal legal fees. In addition, Galloway deducted payroll expenses for his employees including federal and FICA withholdings, but kept the withholdings and failed to remit them to the IRS.
For the four charged years, Galloway reported an income of $13,241 (2003); $28,846 (2004); -$60,438 (2005); and -$37,438 (2006), yet paid personal bills during those years of $167,318 (2003); $170,004 (2004); $135,941 (2005); and $178,458 (2006). Cumulatively, the indictment alleges that he underreported his and his spouse’s taxable income during those years by $1,006,167, resulting in an additional tax due and owing of $234,473. The indictment also alleges that he made false statements to IRS agents in 2010 when they interviewed him about his income, in an attempt to evade assessment of income taxes.
Galloway was arraigned in federal court in Bakersfield this afternoon. He pleaded not guilty and was released on his own recognizance. His next court appearance will be in federal court in Fresno on June 23, 2014 at 1:00 p.m.