January 25, 2017 11:28 AM


Abby Lee Miller‘s made a name for herself as the tough dance coach with a roster of star ballerinas on her hit reality show, Dance Moms, but behind the scenes, she’s been battling financial issues for years.

Now, she’s facing up to two and a half years in prison after pleading guilty to attempting to hide $775,000 of income during proceedings following a 2010 Chapter 11 bankruptcy filing, and to failing to report $120,000 in Australian currency that she allegedly brought into the country illegally.

But even before her most current legal woes, and long before Dance Moms took off, Miller was dealing with financial issues, a hometown source of Penn Hills, Pennsylvania tells PEOPLE.

“Before the show, we’d be [at the studio] on a Saturday afternoon and sheriffs would come and post notices saying they were going to shut the studio down for unpaid taxes,” says the source who witnessed one such instance. “They would be pinning notes.”

(In her 2010 bankruptcy filing, Miller admitted to having $400,000 worth of unpaid taxes.)

Miller’s attorney, Robert J. Ridge, tells PEOPLE, “I can confirm that the studio was scheduled for sale for unpaid taxes.”

Certain individuals in the community rallied around the controversial dance teacher to help her amidst her debt crisis, the source says. Miller, in turn, would offer them free tuition and began to favor the students that gave her more lavish Christmas presents, the source claims.

According to the source, Miller then began to “expect” that the mothers of her dance students would pay her way during the high stakes dance competitions that required her to travel, asking them to foot the bill for hotel rooms and meals, and staying on cots in the girls’ rooms to save money when the families would refuse.

In reference to claims that Miller required that her hotel and meal fees be covered, Ridge tells PEOPLE, “[They] contain assertions I have never heard before — from either witnesses or the government.”

“It was all very tangled,” says the source.

Miller’s impending sentencing is scheduled for Feb. 24, and her attorneys have asked the judge for probation.

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