Son's Georgetown University Tuition Funded Through Father's Tax Evasion

Thomas J. Ernst, formerly a resident of McLean and Arlington, Va., pleaded guilty Tuesday to corruptly impeding and impairing the Internal Revenue Service (IRS) and to  one count of tax evasion for 2005, the Department of Justice and IRS announced in a news release.

Ernst was the president and chief executive officer of Medicure Plus Inc., which operated as a third-party administrator of the Postmasters’ Benefits Plan (PBP) between 2001 and 2007.

During that time he had Medicure divert monies from a corporate bank account for his personal use, including paying for his son's tuition at .

According to the news release, the corporate money was used for:

Numerous personal expenses, including, a summer rental house, more than $1.5 million in payments to himself, his wife, his sister-in-law and his sons, his son’s Georgetown University college education and various property purchases and rentals.  In all, these payments totaled more than $3.3 million.

He concealed the funds by depositing money in nominee bank accounts, buying property in family members' names and creating fictitious documents to hide the income from the IRS.

According to the plea agreement, the tax loss exceeds $2.5 million.

In a live online conversation on the Washington Post in December 2003, Ernst chatted about PBP, encouraging people to join.

"Three biggest and best reasons to join PBP are (1) quality, (2) quality, and (3) quality," he wrote.

Later in January 2006 the Office of Personnel Management (OPM) dropped the the Postmasters plan from the Federal Employees Health Benefits Program after the OPM inspector general audited the program and Medicure.

A Washington Post article at the time reported:

The inspector general also said it found "numerous expenses that were either explicitly unallowable or did not benefit the federal program." The audit report listed Medicure payments that went to family members, a Democratic campaign committee, a university and a kennel.

At the time Ernst responded saying:

the audit wrongly included "private money" from records that were mistakenly provided to OPM for the inquiry. "We never charged a dime to the federal contract," he said.

Now, Ernst could face up to three years in prison and a $250,000 fine for impeding the IRS and up to five years in prison and a $250,000 fine for the tax evasion conviction.