UPDATE: Mishawaka businessman admits to welfare fraud, tax evasion

February 10, 2012|By Kelli Stopczynski (kstopczynski@wsbt.com)

SOUTH BEND – The owner of Kenneth G. Rare Coins pleaded guilty Friday afternoon to welfare and bank fraud and tax evasion.

Kenneth Gaipa, 43, entered the admission of guilt to a federal judge.

In 2008, 2009 and 2010, Gaipa failed false tax returns to the Internal Revenue Service – “significantly under-reporting” income for himself, his wife and his business. He admitted to skimming cash from the business and “failed to disclose to [his] tax return preparer that significant amounts of his personal expenses were run through the business as “business expenses.”

Gaipa also admitted to the judge that he lied to the Social Security Administration, saying he hadn’t worked between February 2006 and June 2011 when, in fact, he was earning “substantial profits” at his business, Kenneth G. Rare Coins and Estate Jewelry in Mishawaka and Goshen. He did this so he could continue to receive Social Security Disability payments in an amount greater than was due and when no payment was authorized.

When the judge asked if he had any medical problems, Gaipa said he’s been seeing a doctor and taking medicine for multiple sclerosis for the past five years and, at times, the medicine he takes for the illness clouds his thinking.

Also in court, he admitted to committing bankruptcy fraud in 2008 and 2009 when he under-reported his income and falsely stated he did not own Kenneth G. Rare Coins and Estate Jewelry. He also concealed assets from the US Trustee and his creditors.

As part of the plea deal, Gaipa cannot appeal the case in a higher court or in front of another judge, he cannot obtain anymore reports or records from the investigation from the government and he must cooperate with the IRS. Gaipa is not in jail, but he had to turn in his passport to the U.S. Marshals Service.

United States Attorney Donald Schmid asked the judge for leniency in sentencing Gaipa since the business owner accepted responsibility for his actions.

According to sentencing guidelines, Gaipa could receive up to 25 years in prison and have to pay about $1.25 million in fines, plus the roughly $368,000 he owes the IRS.

His sentencing is slated for May 17.

Both Kenneth G. Rare Coins locations in Mishawaka and Goshen are still open and in business.

Both Gaipa and his attorney declined to comment on the case.

|

|

|