McClure Pleads Guilty, Remains Free On Bond

ABINGDON, Va. – Late in April 2006, Larry McClure received a visit from a friend and client who had driven from Florida with a burning question.

Why, Keith Segars wanted to know, had special agents from the Internal Revenue Service hounded him the previous day about payments he had made to McClure? With the revelation that he was in the crosshairs of federal investigators, McClure acted quickly, attempting to disguise thousands of dollars he failed to report on his tax returns, federal prosecutors revealed in court Thursday.

McClure, co-founder of Morgan-McClure Motorsports, pleaded guilty to five counts of filing false income tax returns, obstructing the federal investigation and lying to IRS investigators. He faces up to 15 years in prison and $1.25 million in fines. He also must pay $59,852 in restitution to the Eastman Kodak Co. as a result of submitting a false invoice, and $25,000 in investigative fees to the IRS.

McClure remains free on bond pending his sentencing, which is set for April.

In exchange for his plea, prosecutors moved to dismiss two other indictments against McClure alleging money laundering, wire and mail fraud, which U.S. District Court Judge James P. Jones accepted. Prosecutors also will move for a reduction in his offense level at sentencing.

The motorsports icon, who last week acknowledged his guilt in a written statement his attorney submitted to the Herald Courier, declined to comment after the hearing.

Testimony from a special agent for the IRS on Thursday added details to the charges against McClure. In all, McClure failed to report $269,000 on his tax returns for 2002, 2003 and 2004, which he will amend and refile as part of his plea agreement. Agent Trevor McMurray estimated that McClure owed more than $100,000 in taxes.

McMurray described in court how he and another agent interviewed Segars in Jacksonville, Fla., on April 25, 2006. The following day, Segars drove to Abingdon to confront McClure, he later told investigators. Within a week of Segars’ visit, on May 3, McClure contacted him by phone, wanting to know how much Segars had paid him over the years for racecar services.

Segars, a racecar driver in the American Racing Club of America (ARCA) series, put the number at $325,000 – an accurate figure that included a $53,883 payment that McClure properly reported to the IRS in 2002. The next day, Segars received a check for $325,000 signed by McClure’s wife, Virginia, and dated May 3.

The check carried the explanation, “loan repayment.”

When McMurray and another IRS agent met with McClure in June 2006, he elaborated on the $325,000 check to Segars. He described the payments Segars made to him over the years as a “loan between friends,” McMurray testified.

In reality, the agent said, “[McClure] was attempting to convert income that had to be reported ... into a loan.”

McClure’s ability to pay apparently was not an issue in his failure to report the payments from Segars on his tax returns. McMurray noted that the $325,000 check for Segars was drawn on a checking account McClure held jointly with his wife. In the course of his investigation, McMurray testified, he found that McClure had a net worth of “several million dollars.”

McClure, offered the chance by Jones to dispute any of McMurray’s statements, raised no objections.

“The prosecution of individuals who intentionally conceal income is a vital element in maintaining public confidence in our tax system,” C. Andre Martin, special agent-in-charge for the IRS criminal investigations, said in a written statement released Thursday.

“We should not expect the honest taxpayer to foot the bill for those who hid income from the IRS. All Americans have a duty to pay their fair share,” Martin said.

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