[1]MOBILE, Ala. (BP)–Sentencing will be Nov. 4 of the former president of the University of Mobile, Michael A. Magnoli, in a federal conviction for falsifying his 1993 federal income tax returns.
Magnoli, in pleading guilty to the charge Sept. 20, stood motionless in front of federal district Chief Judge Charles Butler with his attorney, James Brooks, near him.
“Yes, sir,” Magnoli said in response to Butler’s question if he was pleading guilty to the federal charge. Just over a dozen people were present in the Mobile, Ala. federal courtroom, including IRS and FBI agents and personnel from the U.S. attorney’s office.
“He is a convicted felon as of today and will be so the rest of his life,” said Michel Nicrosi, assistant U.S. attorney and chief of the criminal division, as she talked with the press after the session.
Magnoli and his attorney declined comment to the press. Sentencing is scheduled in Mobile at 8:30 a.m. Nov. 4.
UM President Mark Foley said his prayers were with the Magnoli family as they worked through this new turn in circumstances.
According to the plea agreement, furnished by the U.S. attorney’s office, the maximum penalty Magnoli could receive is all of or part of the following: up to a three-year prison sentence; a fine not to exceed $250,000; a mandatory special assessment fee of $100, cost of prosecution and supervised release of one year, to follow any term of imprisonment.
“The investigation focused on Mike Magnoli’s conduct, not the university’s, and we didn’t find any wrongdoing by anyone [on the main campus] other than Mike Magnoli — that’s why he’s the one in federal court today,” assistant U.S. attorney Nicrosi said. The charge Magnoli pleaded guilty to was reporting $645 as other income, when it was really $15,000, on his 1993 income tax return. The $15,000 was given to him in cash by Roger Gonzalez, former head of the university’s facility in Nicaragua.
Nicrosi said Magnoli brought the cash into the United States Sept. 3, 1993, when returning from Nicaragua.
“At the New Orleans airport, he declared that he had $15,000 in cash on his person, but he listed that his occupation was the president of the University of Mobile and that the money belonged to the university. That money never went to the university or into any accounts of the university. The university was not aware of any of that money — that, in fact, is not how they conduct business,” she said.
Magnoli told his wife to deposit $8,000 of the amount into their personal bank account, then the rest was deposited the next day. Magnoli then used $5,000 of it as earnest money to secure a $245,000 lot on the beachfront community on Ono Island near Gulf Shores and Perdido, according to the attorney’s office and the IRS.
On Sept. 20, a $4,200 check was given to the IRS; the amount is what Magnoli should have paid to the agency for the $15,000 income and does not include any penalties or interest. The IRS will assess a civil fraud penalty for fraudulent conduct, plus interest, plus the IRS can reassess his tax for that year, Nicrosi said.
Ruth Davidson, an IRS spokesperson, said by phone that if anyone makes an underpayment of tax due to fraud, they can be assessed a penalty of 75 percent of the difference between what they paid in taxes and what they should have paid. Interest can also be assessed on the difference, and that interest is revised quarterly but currently is 8 percent. She was not speaking specifically of this case but of regulations for anyone underpaying taxes due to fraud.
Nicrosi said Magnoli did “admit the conduct, which is to his credit, ” on an illegal campaign contribution charge, for which the Federal Election Commission could fine Magnoli up to $10,000 per violation for the five election commission code violations that he committed. This crime involves illegal campaign contributions, in which Magnoli admits instructing four UM employees to make contributions to the federal election campaign of Sen. Mitch McConnell of Kentucky. To reimburse them, he directed the university to issue “bonus” checks.
“That’s what we call a conduit campaign contribution, and it’s a violation of federal law,” Nicrosi said.
As restitution, a check for $5,420.04 was delivered to the university Sept. 20 by a representative of the U.S. attorney’s office.
As part of the plea agreement, made between the U.S. attorney’s office and Magnoli, this charge was dropped, due in part to statutes of limitation and heavy fines potentially coming from the FEC, but restitution of the money to the university was mandatory.
Nicrosi said the four employees, whose names were not released, will not be charged, nor will the university. “This closes our investigation,” she said. “That’s good for the university and the community. We saved a long, expensive trial by going through this process — by him pleading guilty.
“I think it is good for this community to hear directly from Mr. Magnoli that he is guilty.”