Twin Cities medical-device firm CEO charged in $6M tax evasion case

A Twin Cities medical-device firm CEO has been charged after the Internal Revenue Service says he and his company failed to pay several years of payroll taxes, interest and penalties totaling more than $6 million.

Larry W. Lindberg, 68, a former pharmacist and owner of Midwest Medical Holdings in Mounds View, was charged Monday in U.S. District Court in Minneapolis with one count of tax evasion in connection with his neglecting to pay the IRS several hundred thousand dollars in federal payroll taxes each quarter.

Lindberg, who splits his time living in the Twin Cities and in Florida, has his first court appearance scheduled for April 21. He intends to plead guilty at that time, his attorney said.

"Larry felt bad about it," attorney Tom Brever said Wednesday. "He knew he screwed up. ... He knew he had to make peace."

Brever said that while federal judges have wide latitude when it comes to imposing a sentence, statutory guidelines call for prison time in this case ranging from about two years and four months to two years and nine months in prison. The plea agreement also calls on Lindberg to make good on the more than $6 million he owes.

"Beginning in 2011, the IRS spent years attempting to collect on the tax debt," the U.S. Attorney's Office said in a statement announcing the charge. "Lindberg entered into several installment agreements with the IRS in which he agreed to make regular payments towards the tax debt, but ultimately failed to make the payments and defaulted on each of the agreements."

Lindberg diverted the money to other business entities he controlled "in order to evade payment of his tax obligations," the charging document read.

He spent the money on real estate, personal travel and other nonbusiness spending.

"Lindberg also placed real estate and assets in the name of limited liability companies controlled by third-party owners in order to disguise his ownership and control of the property," the criminal complaint continued.

Prosecutors estimate that Lindberg owes the IRS more than $4.4 million in taxes, with interest and penalties bringing the overall amount owed to $6,058,980.

Midwest Medical, which employs more than 200 people, continues to operate but is moving toward finding new leadership, Brever said. Whoever runs the company will have to be a licensed pharmacist, the attorney said.

Late last year, the state Pharmacy Board revoked Lindberg's license over unrelated matters, namely allegations of unsanitary conditions of work being done in unsterile conditions, according to board records.