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$318,000 tax bill waiting for day care owner headed to prison

KINGMAN - Daycare owner Raycene Osterman on Tuesday was sentenced to 18 months in federal prison and ordered to pay more than $300,000 in back taxes.

Osterman, who operated three Kiddie Korral outlets as founder and president of parent company K-Top, Inc., admitted in federal court last November that, starting in 2003, she deducted taxes from employee paychecks but never remitted those taxes to the Internal Revenue Service. She also was repeatedly warned to pay up or face criminal sanctions.

The IRS warned the Kingman woman as early as 2005 that she could face criminal charges if she didn't make good on the back taxes.

When she entered her guilty plea in federal court in Phoenix last fall, Osterman said she "repeatedly promised this agent that I'd deposit the overdue payments, but I never followed through on these promises."

She was warned in 2005, 2008, 2009 and in 2011.

Osterman, 55, told the court she used the unpaid taxes to pay business expenses, including rent in the amount of $260,000. According to court documents, the landlord, Five-O Partners, is a trust controlled by family members.

While Osterman will spend less than two years in prison, she will likely never be free of her debt.

Special Agent Brian Watson, an IRS criminal investigator, said Osterman was ordered to pay $318,304 in restitution to the IRS.

She will have to pay $25 per month during her incarceration and $500 a month once she's released from prison. At that rate, about 53 years would pass before Osterman met her obligation.

In addition to prison time and restitution, Osterman will be supervised for three years upon her release. She must report to federal prison by July 5.

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