Bristol men charged in federal tax conspiracy

From Staff Reports


   Two Bristol, Tenn., men were indicted March 29 by a federal grand jury in Greeneville on charges of conspiracy to defraud the U.S. Treasury Department and the Internal Revenue Service.
   Jerry W. Strouth, 52, and Gary L. Fritts, 46, allegedly impeded the functions of the two agencies in computation and collection of federal income taxes. The indictment also charges Strouth with income tax evasion for calendar years 1994, 1995 and 1996 by failing to file a federal income tax return for each of those years.
   Maximum penalties, if convicted, are five years' imprisonment, $250,000 in fines, three years of supervised release, and $100 special assessment.
   On Sept. 19, Fritts appeared before U.S. Magistrate Judge Dennis Inman for an initial appearance and was released on bond. On Oct. 4, Strouth appeared and was arraigned and released on bond. The trial date will be set in court Tuesday and Fritts will be arraigned at that time.
   According to the indictment, Strouth and Fritts dealt extensively in cash and took steps to conceal the fact that Strouth owned and received income from two adult-entertainment businesses named the Bottoms Up, 3708 W. Market St., Johnson City, and 3253 W. State St., Bristol.
   The indictment further alleges that both took steps to conceal the fact that Strouth purchased and owned a home in Bristol, Tenn., and that they withheld documents and made false statements and representations to IRS agents.
   The indictment states that around August 1992, both Strouth and Fritts concealed Strouth's purchase of the property at 3708 W. Market St., by paying for it with cash and proceeds of a loan made in the names of Fritts and his wife. Fritts allegedly refinanced the mortgage in September 1995 and falsely reported to the bank he was the owner.
   Strouth allegedly listed his brother as the owner of the business license for Bottoms Up in Johnson City. Additionally, the indictment alleges that around Nov. 2, 1995, Strouth and Fritts concealed Strouth's possession of $125,000 in cash by purchasing and causing others to purchase 12 cashier's checks in amounts less than $10,000 and made payable to an escrow account. The cashier checks allegedly were later used by Strouth to purchase a house located at 596 Beidleman Road, Bristol, Tenn.
   The investigation was conducted by IRS Criminal Investigation. Assistant U.S. Attorney Sarah Shults represents the government.