UPDATED: Motorsports Icon Sentenced To 18 Months In Prison

ABINGDON, Va. – As he was about to be sentenced Monday for federal income tax fraud, those in the courtroom stood up for Larry McClure.

Supporters of the motorsports icon filled the courtroom, which was too small to hold them. Family members, friends, giants of the stock car racing world – around 50 people– spilled into the hallway, sat on benches and stood shoulder to shoulder in solidarity with McClure and his family.

Junior Johnson, the fabled moonshiner-turned-dirt track racer and NASCAR team owner, turned out. Joy Stata, a Florida native, was there to support the man who put her hometown of Bartow on the racing map. Jeff Byrd, president of Bristol Motor Speedway, stood outside, having arrived too late to get a seat.

“How long do these things last?” Byrd wanted to know. He had never been to a federal court hearing.

Inside the courtroom of Judge James P. Jones, McClure made his last public mea culpa.

“I’d like to apologize to you, the court,” he told Jones, chief judge for the Western District of Virginia. “To the opposing counsel, to my family, my God. His will be done, whatever you decide.”

Jones’ decision ushered in a stunned silence, punctuated by sniffles: McClure will serve 18 months in prison, the low end of the sentencing range.

For McClure’s supporters, it was a crushing end to a three-year criminal investigation that has taken a toll on him personally and financially. McClure pleaded guilty in January to five counts of filing a false income tax return, obstructing the federal investigation and lying to Internal Revenue Service investigators.

In addition to the prison time, McClure was fined $40,000, ordered to reimburse the IRS $25,000 for its investigation, and to pay nearly $60,000 in restitution to Eastman-Kodak for filing a false invoice. He was also ordered to refile his personal income tax returns for 2002, 2003 and 2004.

During those years, McClure admitted to accepting $269,000 in cash payments from a friend in exchange for services provided by Morgan-McClure Motorsports, of which McClure is a part owner. He did not report the income to the corporation or on his personal tax returns, and owes the government just over $100,000.

“We all know anyone can have tax problems,” Jones said in delivering the sentence.

But McClure’s failure to pay was not based on a technicality, the judge said.

“It was an elaborate scheme to defraud. He cheated the honest taxpayer.”

The IRS investigation found that McClure accepted cash payments from Keith Segars, a racecar driver in Florida, for the use of Morgan-McClure cars and track services. Segars had been deducting his payments to McClure on his taxes, but the payments did not show up as income in the returns filed by McClure or his business.

When he realized the IRS was looking for the unreported income, McClure tried to hide it. He asked Segars how much he had paid him over the years, and overnighted a check for $325,000 to Segars – too much, as it turns out – describing it as a “loan repayment.”

A prosecutor on Monday called McClure to the witness stand and asked him why he called the payment to Segars a loan.

“I was scared to death,” McClure said. “I don’t know why I did it. It was stupid.”

Asked if he would seek to recoup the $325,000, he said, “I’m not sure what my intentions will be.”

Wayne Austin, McClure’s defense attorney, sought to reduce the sentencing range by arguing that the government incorrectly calculated how much his client owed in taxes.

As an agent of Morgan-McClure, Austin argued that the income McClure collected from Segars was corporate income before it was personal income, and that it should flow through the corporation before it came to him. Using that standard, a tax consultant retained by McClure computed that he owed a shade under $80,000 to the government. The lesser amount would have meant a sentencing range of 12 to 18 months.

Jones called the argument “ingenious” but rejected it.

The evidence in the case, the judge said, suggested that McClure intended to hide the money from his business partners and keep it for himself. When, in 2003, a thief broke into the business and cracked a corporate safe, making off with an $80,000 cash payment from Segars, McClure filed a police report but not an insurance claim. He did not inform the accountant the corporation retained to prepare its taxes, even though it should have been reported as income and deducted as a theft-loss.

Even after Jones ruled against Austin’s interpretation, the defense attorney argued that incarcerating McClure benefited no one.

He called on Eric McClure, his client’s nephew; Scott Dixon, a member of the church McClure attends; and Tim Morgan, McClure’s longtime friend and business partner – who all spoke of the defendant’s generosity toward others and his religious faith.

McClure’s absence would mean a hardship on his family and on the Ford dealership he operates in St. Paul, said Morgan, who choked up as he pleaded the case of his friend and partner.

In his closing argument, Assistant U.S. Attorney Randy Ramseyer pushed for a prison sentence to punish McClure and deter others from committing the same crime.

Austin said his client had suffered enough. As for deterring future crimes, Austin asked onlookers to put themselves in the defendant’s chair, to live under the dark cloud of a criminal prosecution for three years, where it is “the last thing you think about before you go to bed and the first thing that crosses your mind when you wake.”

Austin limited his character witnesses to three. He asked McClure’s supporters present to stand. The packed courtroom duly stood.

With Jones’ sentence, the dark cloud of uncertainty evaporated. The anguish was unleashed.

Said Eric McClure: “It’s a devastating day personally for our family.” His uncle, he added, was punished disproportionately for being successful in a small community.

McClure’s brother, Jerry, put it more bluntly: “He was made an example of. He was made a white collar example.”

His sentence set, McClure followed the sympathetic crowd outside. Asked for comment, he said, “I think today said everything.”

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Earlier Today

ABINGDON, Va. - Motorsports icon Larry McClure was sentenced in federal court today to 18 months in prison.
McClure, who must pay $40,000 in fines and reimburse $25,000 to the government, earlier pleaded guilty to filing false income tax returns, obstructing the federal investigation and lying to Internal Revenue Service investigators. The sentence was on the lower end of the range recommended by the government and accepted by the court. He could have faced 15 years in prison and $1.25 million in fines.
McClure will self-report to begin serving his prison term. When released, he will be on supervised probation for a year.
U.S. District Judge James Jones turned down McClure’s defense attorney’s request that he not be sentenced to prison.
For all the details, read Tuesday’s Bristol Herald Courier.