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Man may serve 3 years in prison for obstructing IRS attempts to collect back taxes

| Saturday, Jan. 5, 2013, 12:03 a.m.

An Upper St. Clair man who wreaked financial havoc on several companies pleaded guilty on Friday to a federal charge that carries a maximum sentence of three years in prison.

Michael Carlow, 61, was facing up to 22 years in prison on six counts of fraud and tax evasion, but the government agreed to drop those charges in return for his guilty plea to “corruptly endeavoring” to obstruct the Internal Revenue Service's attempt to collect more than $6.2 million he owes in back taxes, interest and penalties.

Carlow admitted that he used his longtime girlfriend, Elizabeth Jones, 52, of Upper St. Clair, to conceal his income and assets from the IRS by funneling them through a series of companies that he either gained control of or started.

Some of those companies have folded. Jones pleaded guilty to the conspiracy in August and awaits sentencing.

Carlow owes the money from a 1996 federal conviction on six counts of bank fraud and tax evasion connected to a $31 million check-kiting scheme that closed City Pride Bakery and damaged the finances of D.L. Clark Candy Co., Pittsburgh Brewing Co. and L.E. Smith Glass Co. in Mount Pleasant.

Other than answering questions from U.S. District Judge David Cercone, Carlow did not speak during the hearing and declined to comment later.

One of his attorneys, Martin Dietz, said three years “is a far cry from the threat of putting him in jail for the rest of his life.”

“I think it's pretty clear the government made a pretty big concession in the case,” Dietz said.

The whole tenor of the case changed when the U.S. Attorney's Office in Pittsburgh recused itself from the case after Carlow's lawyers filed a motion to get the case thrown out because Carlow had briefly consulted with one of the prosecutors when she was still in private practice.

The Justice Department's Tax Division in Washington took over the prosecution. The division's lawyers, Jeffrey McLellan and Kenneth Vert, declined to comment.

U.S. Attorney David Hickton also declined to comment.

Carlow, who remains free on $25,000 bond, is scheduled to be sentenced Oct. 4.

Brian Bowling is a staff writer for Trib Total Media. He can be reached at 412-325-4301or bbowling@tribweb.com.

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