Attorney General's News Release

April 4, 2006

Lake of the Ozarks real estate developer who hired undocumented workers faces tax-related criminal charges

Camdenton, Mo. — Attorney General Jay Nixon and Camden County Prosecuting Attorney Jim Icenogle today filed criminal charges against the developer of a luxury condominium complex at the Lake of the Ozarks. The developer, Michael G. Schlup, allegedly failed to withhold taxes from his construction workers - many of whom were undocumented workers - or remit those payroll taxes and file the appropriate return with the state.

Schlup (DOB - 11/29/56), of Leawood, Kan., faces 12 felony counts of failure to deduct Missouri employer withholding tax, one felony count of failure to file a Missouri employer withholding tax return, and one felony count of failure to pay Missouri employer withholding tax. Schlup's businesses, Schlup Investments Inc. and Plaza Gardens on the Lake Inc., were involved in the construction of the Plaza Gardens on the Lake condominium complex located near Sunrise Beach.

"These are serious allegations of someone profiteering at the expense of taxpayers, Missouri workers and law-abiding businesses," Nixon said. "Those who evade tax responsibilities by not deducting or paying taxes and by paying workers under the table have an unfair and illegal advantage over those businesses that work hard and play by the rules. The playing field for businesses needs to be level."

The allegations against Schlup cover the first several months of 2005. Nixon's office began its investigation after learning of reports of one worker death and several serious worker injuries occurring at the Plaza Gardens construction site. Nixon said his office has reason to believe that as many as 30 to 35 undocumented workers may have been working at the site at any one time.

A probable cause statement filed with the charges says that Schlup paid his workers in cash and deducted no withholdings from the wages. Employees at the site worked from 60 to 70 hours per week, according to the statement, and the undocumented workers were paid between $8 and $9 an hour.

"It is not right to exploit any workers, and those who believe they can get away with these abuses because they have hired workers who are not familiar with our laws need to think again," Nixon said. "These practices take advantage of vulnerable workers and place their safety at risk, they depress pay for hardworking Missourians, and they are unfair to the businesses that follow the laws of this state."

Each count of failure to withhold, report or remit tax is punishable upon conviction by a fine of up to $10,000 and a term of imprisonment of up to five years. As in all criminal cases, the charges against the defendant are merely allegations, and he is presumed innocent until or unless proven guilty in a court of law.

Inquiries from consumers should be directed to consumer@ago.mo.gov or 1-800-392-8222 (from within Missouri) or 573-751-3321 (outside Missouri).

All media inquiries should be directed to Press Secretary John Fougere.

E-mail      Phone: 573-751-8844         Fax: 573-751-5818