Man accused of 'skullduggery' sentenced to 27 months in prison in tax case

Mar. 14—As a former in-law of the prominent Abruzzo family, Victor Kearney collected $800,000 a year from trusts set up after the unexpected death of his young wife, Mary Pat Abruzzo-Kearney, in 1997.

His unsuccessful attempt in 2013 to squeeze more money from the trusts, in a bitter legal fight with her brothers, helped shed light on a multi-year criminal tax fraud that showed Kearney and his accountant hid his trust income from the IRS.

On Thursday, a federal judge in Albuquerque sentenced Kearney, 59, to 27 months in federal prison after a jury convicted him a year ago of one count of conspiracy and one count of making and subscribing a false return, statement or other document. He also must pay restitution of nearly $1.19 million.

The length of prison time was far less than the 60 months federal prosecutors sought.

They noted in a sentencing memorandum that Kearney had previously been accused by the U.S. Court of Appeals of "skullduggery" and "obnoxious conduct" after he filed a Chapter 11 bankruptcy case in September 2017. At that point, according to a court ruling, Kearney "managed to accumulate over $7 million in debts."

The appeals court wrote that Kearney's financial problems arose "not from illness, accident, or bad luck, but from a pattern of his own bad choices."

The court wrote that the record was replete with "evidence of Mr. Kearney's obnoxious conduct ... including his misconduct with respect to the trusts, his credibility issues, his contempt for the court and the judicial process, and his appalling litigation habits."

Kearney, who has lived in Zephyr Cove, Nevada, married Mary Pat Abruzzo when she was 22. After she died in 1997 at the age of 31, he became the beneficiary and co-trustee of two testamentary trusts.

He received about $16 million in trust income from 1997 to 2013 and initially had reported the trust income for several years on tax returns. The trusts were shareholders in Alvarado Realty Co., which developed Sandia Peak Ski Area and Sandia Peak Tramway, according to federal prosecutors.

But after a restructuring of the company, "the taxes defendant owed to the government were no longer withheld by ARCO or the trusts" — and Kearney didn't pay them. Instead, he conspired with tax attorney and accountant Robert Fiser to submit false tax returns that showed no to little trust income. Supposedly the intent was to amend them later to report the full trust income, but that never happened.

In 2013, Kearney sued his former brothers-in-law Benjamin and Louis Abruzzo as co-trustees. He claimed they mismanaged the trusts to his financial disadvantage, according to federal prosecutors. The Abruzzos countersued, and all claims were resolved in their favor.

But during the litigation, state District Judge Alan Malott heard evidence that prompted him to refer Kearney's case to the IRS. Kearney and Fiser were indicted in 2019.

Prosecutors in their sentencing memorandum quoted from letters submitted by the Abruzzos, whose parents Ben and Pat Abruzzo died in a plane crash in 1985.

Benjamin Abruzzo wrote, "Since the very early months following the passing of our sister Mary Pat, Mr. Kearney has made it very clear that his interest was to extract every possible dollar possible from our sister's trust and take control over her estate for his sole benefit and ignoring her wishes."

Louis Abruzzo, another brother, stated that Kearney's "only goals in life are to take money from people, society, the government and avoid paying it back. He is a master con man. ..."

Louis Abruzzo added that, "Our family has been blessed by this community supporting our various businesses that my father and Mr. Bob Nordhaus envisioned and built. Our goal was to honor that by working hard, not risking the farm while improving it, growing it, making jobs and careers available, and serving the public while enhancing New Mexico.

"I guess the part we did not expect was, above all, to protect the companies from the likes of Kearney."

Upon his release from prison, Kearney will be subject to three years of supervised release.

Fiser pleaded guilty on July 11, 2022, to one count each of conspiracy and aiding and assisting in preparation of a false and fraudulent return and was sentenced to 15 months in prison. He died in August.