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Year and 1 day in prison in tax evasion case for former CPS bus contractor

Jewel Lockhart, owner of Jewel's Bus Co., leaves a sentencing hearing at the Federal building on October 3, 2018. | Max Herman/For the Sun-Times

On the day she turned 70, Jewel Lockhart — a politically connected bus company owner who made millions in contracts with Chicago Public Schools — learned that she would likely spend her next birthday in federal prison.

U.S. District Judge Robert Dow sentenced Lockhart to a year and a day in prison on Wednesday morning, though the judge said that Lockhart, who was joined by two dozen supporters in court, would likely be released from custody after about 10 months.

Lockhart — who founded Jewel’s Bus Co. — reached a plea deal with prosecutors earlier this year after she was charged with not only hiding income from her company’s tax-return preparer, but also dodging employment taxes and lying about the use of corporate funds to purchase a home in the city’s Oakland neighborhood for $500,000 and to renovate it for $600,000.

“I am sorry,” a tearful Lockhart told the court. “I’m truly sorry for the mistakes I’ve made and I know I’ve done wrong.”

Her attorney, Matthew Madden, asked Dow to issue a sentence of home confinement with probation, while prosecutors said the sentencing guidelines called for 37 to 46 months behind bars. At several points during the hearing, Dow said he would not issue a sentence within those guidelines.

Assistant U.S. Attorney Michelle Petersen conceded that Lockhart — an elderly woman with no other criminal history — was “a very unusual defendant,” but rejected the suggestion of home imprisonment.

“This wasn’t a one-time decision,” Petersen said. “The money in this case…was all for her benefit and her family’s benefit.”

Lockhart was also ordered to pay $1,825,448 in restitution to the Internal Revenue Service and $60,540 to the Illinois Department of Revenue. Lockhart, though, has filed for bankruptcy and transferred ownership of the South Side home to her son — who does not live in the United States and has not cooperated with prosecutors.

“She gave away a $1 million asset, basically, to her son, who’s a ghost,” Dow said.

Dow ordered her to report to prison on Jan. 8 to allow her time with her family during the holiday season. The judge acknowledged the sizeable group of loved ones in court as well as the deluge of letters of support for Lockhart he received.

“This is one of the largest turnouts of family and friends that I’ve ever seen,” Dow said. “You’ll be back with this beautiful family before you know it.”

Prosecutors said Lockhart’s evasion scheme started in 2008. In 2012, she met with the IRS and, instead of coming clean, she dug in her heels. In an effort to stop the IRS from levying her bank accounts, she opted to cash business checks at currency exchanges or deposit them in accounts set up in the names of relatives.

“For a fraction of this money, you could get good help with taxes and accounting,” Dow noted. “She got in a hole and she kept digging.”

Lockhart and her supporters arrived at the Dirksen Federal Building by a school bus owned by Northbrook-based Transportation For All, Inc.

The Chicago Sun-Times reported in 2016 that the Chicago Park District hired Jewel’s to bus kids to and from summer camps that year — despite warnings from a CPS official who said he had “uncovered a great deal of illegal activity” by the company.

The Rev. Jesse Jackson intervened with schools officials on behalf of Jewel’s in 2010 and again in 2015, records showed. Jackson told the newspaper he called then-CPS CEO Forrest Claypool to defend Lockhart’s company because she was an “outstanding community servant” he’d known for years.

Last March, a year and a half after prosecutors charged Lockhart, Chicago’s Board of Education voted to permanently ban the company from ever doing business again with CPS — which paid Jewel’s more than $75 million in the 11 years prior.