Cheryl Womack, Mission Hills businesswoman, indicted in $7 million tax fraud case


Cheryl Womack has lived in Mission Hills since 1987, so she has been rich for a while. In April 2002, she became especially rich when she sold her company, National Association of Independent Truckers (which offered liability insurance to truck drivers), for $35 million. 

That wealth let her do lots of things most people can't, like buy up $1.5 million worth of wine and store it in the basement of her Mission Hills home.

On March 15, 2008, Womack apparently decided to try to sell half of her wine collection through an auction house in New York City. Some of her wine collection sold for about $1.6 million, and those bottles that didn't sell were sent to her New York City condo at the Trump Towers.

Womack had the auction house send several wire transfers totaling that $1.6 million to a bank account in the Cayman Islands under the name of Lucy Limited. Lucy Limited was a company that Womack apparently organized in the Cayman Islands in the late 1990s. Later in 2008, Womack drew up a lease agreement between Lucy Limited and herself, purporting to have Lucy Limited lease Womack's Mission Hills wine cellar going back as far as 1995. Soon after, Lucy Limited wired $350,000 to a bank account with Missouri Bank & Trust controlled by Womack.

This income never turned up on Womack's tax returns, which is part of the reason that the well-known Kansas City businesswoman found herself in trouble with federal authorities on Thursday morning.

A grand jury in Kansas City indicted Womack for tax fraud and lying to federal investigators. The 20-page indictment describes the allegations above, along with a complicated web of bank accounts, trusts and various nebulous businesses that investigators claim were established by Womack to carry out a $7 million tax-dodging scheme.

Her attorney, Nathan Garrett, was not immediately available for comment. None of the allegations detailed above or listed in the indictment have been tested in court.

Womack was entrenched in the firmament of Kansas City's business and civic community. After she sold her trucking insurance business, Womack went on to become a venture capitalist, among other things. She also got called up to serve on various boards, including director of the Economic Development Corporation of Kansas City (an administrator of tax breaks for businesses) and the University of Kansas School of Business Board of Advisors.

Her involvement with KU went deeper than its business school. A July article in the Kansas City Business Journal (which called her in 2006 a "Woman Who Means Business") described Womack as the chairwoman of a firm called BidSpot Cares. BidSpot is a fundraising and management firm whose clients are foundations established by former Kansas Jayhawks basketball point guard Mario Chalmers and head basketball coach Bill Self. Womack is a board member of Self's Assists Foundation charity.

Womack's troubles, according to Thursday's indictment, started not long after she sold part of her wine collection. On December 15, 2008, two agents with the Federal Bureau of Investigation paid Womack a visit. During that meeting, Womack allegedly denied that she had open bank accounts in the Cayman Islands and claimed that businesses in the Cayman Islands that the feds say she opened and ran were actually owned by investors whose identity she didn't know. She also allegedly told the feds that Lucy Limited, the Cayman Islands business involved in leasing her wine collection, was owned by investors rather than herself.

A few months later, Womack was testifying in a deposition before federal agents who were pursuing a case involving a tax preparer. The feds allege that Womack told more lies under oath, including her claim that she rented a Cayman Islands condo when investigators believe that a company she controlled owned the condo.

The indictment doesn't identify who that tax preparer was, but it's possible that it was Allen Davison.

Davison was an Overland Park lawyer who became known as "Dr. Poof" for his ability to make his clients' tax liabilities disappear. Starting bogus companies was one of his preferred methods of sheltering taxes, according to the Justice Department. That was until 2010 when a federal judge in Kansas City ordered that he stop running his tax runarounds. That order came down about a year after Womack was testifying in that unidentified case that sought to "enjoin a third party from providing tax advice." 

A federal complaint links Davison to Womack
, saying that he was the in-house tax adviser for the National Association of Independent Truckers until the business sold in 2002. Davison then continued working for Womack under another company she controlled, VCW Holdings LLC.

Speaking of VCW Holdings, that company sued U.S. Bank in 2009, claiming the bank didn't do enough to stop an embezzlement scheme going on with Womack's company. VCW opened an investment account with U.S. Bank in 2002. Over the course of the next few years, about $1.1 million disappeared from VCW's ledger. (The case went to arbitration and was eventually dismissed.) 

Eventually Brandy Wheeler was charged in federal court with embezzling $1.1 million from VCW from 2003 to 2007. Wheeler was sentenced to one year and one day in prison and nearly $1 million in restitution after pleading guilty. 

When Wheeler showed up to her sentencing on August 3, 2010, she apologized to the judge for her actions, as defendants awaiting sentencing often do. The judge asked Wheeler why she started stealing from VCW.

"I feel like the environment that I worked in at VCW was extremely toxic. ... I feel like this was a way of coping and dealing with my anger toward my boss and towards the situation I was placed in," Wheeler told the judge, according to a transcript of her sentencing.

Interestingly enough, that transcript was filed in federal court for Wheeler's case less than a week ago by Womack's attorney. It was attached as an exhibit in a larger filing complaining that before her sentencing, 
Wheeler unloaded a bunch of assets, like a lake house in Hollister, Missouri, a boat, a 2006 Yukon Denali. In all, she made more than $300,000 from her asset fire sale but still hasn't paid a dime toward her restitution to Womack and VCW.

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