Columbia City Councilman E.W. Cromartie did not pay federal taxes and lied about it to investigators, who were bearing down on his finances, according to federal court documents.
As a result, Cromartie, the city's longest-serving council member, will resign his post and go to prison, according to a plea agreement filed late last week in U.S. District Court of South Carolina.
But moving forward on those penalties could take weeks because a federal judge - who must approve the plea agreement - has not been assigned, said acting U.S. Attorney Kevin McDonald.
The case should be assigned later this week, he said, adding it may take at least another week for a hearing to be set.
That will set the stage for prosecutors to spell out their case of how Cromartie evaded federal income and employment taxes and how he divided up payments for legal fees to avoid reporting them to the government.
Cromartie, 64, agreed to plead guilty to tax evasion and two counts of structuring money transactions to evade reporting requirements, according to documents filed in federal court.
He also agreed to a punishment deal, including:
- A prison sentence of 12 months, plus one day
- Paying $58,075 in taxes owed
- Resigning from City Council
- Forfeiting his law license
- Taking a lie detector test
- Cooperating with law enforcement in any investigations related to his case
Legal experts familiar with federal sentencing guidelines said it is likely Cromartie will spend 10 months in federal prison.
Monday afternoon, Cromartie appeared briefly in the lobby of his Harden Street law office and told a reporter, "I've got nothing to say."
However, he later released a public statement saying: "I am genuinely sorry for my mistakes in judgment. I am deeply grateful to the citizens of District II and the City of Columbia, and the thousands of people who have supported me over my 27 years of public service."
Cromartie is being defended by Columbia attorney I.S. Leevy Johnson.
Prosecutors on Monday would not discuss details of the case, including how long they have been investigating Cromartie or what led them to do so.
According to the charges, Cromartie attempted to evade taxes between April 2003 and April 13, 2009.
Prosecutors specifically cite that he did not pay $25,316 in 2004 income taxes.
The charge sheet also says Cromartie avoided paying employment taxes.
Business owners are required to withhold federal and state income taxes on their employees. Cromartie is a managing partner in Cromartie Law Firm and owns the One Stop Party Shop off Beltline Boulevard.
The federal charges do not say how much in employment taxes was owed.
But the charges said the total tax loss to the U.S. government was $58,075.
As for the structuring charges, anyone who deposits more than $10,000 cash in one transaction is required to file a report with the IRS. Banks also are supposed to file a report on the deposit, said Jack Swerling, a Columbia defense attorney who is not involved in Cromartie's case.
"If the IRS doesn't get the reports, they don't know the money has changed hands," Swerling said. "They lose track of it."
One structuring charge shows Cromartie receiving $23,890 in attorney's fees by cashing nine checks written in amounts varying between $8,000 and $10,000. According to court records, those transactions took place between Nov. 10, 2005, and Dec. 1, 2005.
In the second structuring charge, court records say Cromartie received $25,000 by cashing nine checks between July 14, 2006, and July 18, 2006. Eight of those checks were for $2,500 each and one was for $5,000, according to court records.
During that same period, Cromartie divided up payments to a client, too. He wrote six checks totaling $52,864 to the client, according to court documents.
McDonald would not comment on the specifics of those transactions or why Cromartie would divide payments on behalf of a client.
Those questions will be addressed in court, McDonald said.