Central Kentucky businessman must pay $19 million to the IRS. Find out why.

A Central Kentucky businessman must pay more than $19 million in restitution to the Internal Revenue Service after pleading guilty Thursday to charges related to a tax fraud scheme.

Clarence Michel Jr., 48, pleaded guilty to one charge of conspiracy to defraud the government and four additional charges of preparing false personal tax returns. Michel also faces a prison sentence, but the term won’t be decided until his May 23 sentencing.

As part of the plea agreement, Michel must pay $19,227,376 to the IRS. The initial indictment charged that he and another man had failed to pay $14.6 million in payroll taxes, but further investigation revealed additional taxes owed.

Michel and the other man, Warren Griffin II, were indicted last year on charges of failing to pay payroll taxes owed by various companies they operated in Garrard and Boyle counties between 2012 and 2016.

The companies went under the names CJ Michel Industrial Services LLC, JR Payroll Solutions\LLC, Michel Mechanical Services LLC and ALR Staffing Services.

The indictment alleged the two withheld payroll taxes from their employees’ paychecks, but instead of paying that money to the IRS, they instructed an employee to write checks to them.

To hide the scheme, Michel and Griffin changed the names of their companies and started new companies under the names of various nominee owners, the indictment alleged.

In August, Griffin was arrested and indicted in southern Illinois on a charge of being a convicted felon in possession of a firearm. He has not appeared in Kentucky to answer to the tax fraud charges.

For the conspiracy charge, Michel faces up to five years in prison and a fine of up to $250,000. For each charge of making false statements on his personal income taxes, Michel faces three years in prison and a $250,000 fine.

Michel remains free on bond until his May 23 sentencing in U.S. District Court in Lexington.

Defense attorney David Guarnieri told U.S. District Judge Karen K. Caldwell that Michel has a “business opportunity” in oil and gas exploration that would allow him to “make inroads” in paying the restitution.

But that will require him to travel while on bond. Guarnieri asked if the electronic monitoring could be removed from Michel.

Assistant U.S. Attorney Dmitry Slavin had no objection, so Judge Caldwell granted the request, but she said Michel must make the U.S. Probation Office aware of all his travel.

Greg Kocher has been at the Lexington Herald-Leader since 1997. He covers state and federal courts, and some breaking news. From 1997 to 2016, he was a regional reporter who covered counties adjacent to Fayette County.