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Former Stillwater mayor pleads guilty to federal fraud charges

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Former Stillwater Mayor Ken Harycki pleaded guilty Thursday to a charge of conspiring to defraud the federal government.

Harycki, 51, was charged last month. He was mayor from 2006 until November of 2014, when he abruptly resigned from office.

According to charges, Harycki, the owner of Customized Payroll Services in Stillwater, prepared and filed fraudulent tax forms for the clients – brothers Thurlee and Roylee Belfrey, both 48, of St. Paul – which helped them conceal over $10 million in tax liabilities, the Pioneer Press reports.

Based on the offense level outlined in the plea agreement, sentencing guidelines call for 37-46 months in prison and a fine of $3,000-$30,000, however Harycki's attorney says he may receive a lesser sentence if he provides assistance in another federal case against the Belfreys, the Stillwater Gazette reports.

"If his cooperation results in conviction of other individuals, the government has agreed to move for a reduction of his sentence," Thomas Brever told MPR News. "That technically is a departure from the sentencing guidelines."

A sentencing date hasn't been set.

The Belfrey brothers ran health care businesses, and U.S. Attorney Andrew Luger says Harycki knew they were collecting payroll deductions from employees, but weren't paying taxes to the federal government.

The Belfreys were arrested Dec. 16, 2014, and charged in U.S. District Court in St. Paul with health care fraud and conspiracy to defraud the United States, the Pioneer Press notes. Their jury trial is set to begin Feb. 17.

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