BILLINGS — The owners of a Billings based construction business have pleaded guilty to two counts of tax evasion, according to U.S. attorney Kurt Alme on Tuesday.
James Kisling, 51, and his wife Timilynn Kisling, 44, the owners of Kisling Quality Builders, face a maximum of five years in prison, $100,000 fine, costs of prosecution and three years of supervised release.
U.S. Magistrate Judge Timothy J. Cavan presided and will recommend the couple's pleas be accepted by U.S. District Judge Susan P. Watters, who is hearing the case.
The Kislings were released pending further proceedings. A sentencing date has not yet been set.
Prosecutors said in court documents that the Kislings arranged a deal with Larry Wayne Price Jr. to hide income when Price hired KQB to build his house, one of the largest residential mansions ever constructed in Billings, in 2014.
KQB agreed to build the mansion at cost plus nine percent, making KQB's profit an additional nine percent of the cost.
Price, a former vice president of Signal Peak Energy, is currently awaiting sentencing for wire fraud, money laundering and false statements for defrauding coal companies of about $20 million and lying to investigators about a fake abduction.
Court documents state that the Kislings began building a home for themselves in 2014, and instead of paying for it with their own income, they arranged with Price to make it appear that the cost of their personal house was part of construction costs of Price's mansion.
They referred to it as the "Price Guest House" in work documents for the mansion.
Construction costs were deducted from the nine percent profits they were supposed to receive from Price.
Rather than pay the Kislings their profit for building the mansion, they agreed that Price would simply not pay them approximately $526,132, the cost of constructing their personal home, but would still credit him for doing so.
Through this arrangement, the Kislings disguised $526,132 of profits on the Price mansion and deliberately did not report this income to the IRS on their 2014 tax return.
A similar transaction occurred in 2015 when the Kislings needed a 4275,000 loan on a short time frame for a land transaction in Wyoming.
Instead of going to a bank, the Kislings asked Price for the money. Price agreed to the loan and provided the funds.
In an arrangement similar to the construction of their personal home, the repayment of the loan was disguised as expenses related to the "Price Guest House" and deducted from the nine percent Price was supposed to pay the Kislings.
As a result, the Kislings disguised $275,000 of profits for their work on the Price mansion and deliberately did not report this income to the IRS on their 2015 tax return.
The scheme enabled the Kislings to hide approximately $801,132 in income from the IRS.
The parties disagree on the amount of the government's loss, but hope to resolve the difference before sentencing. The IRS calculated the tax due as $327,664, while the Kislings' accountant has calculated it at $320,102.
Assistant U.S. Attorneys Colin Rubich, Zeno Baucus and Tim Tatarka are prosecuting the case which was investigated by the IRS and the FBI.