LOS ANGELES – LAWFUEL – Legal Newswire – The owner of Oxnard-based Haas Automation, Inc. was sentenced this afternoon to two years in federal prison for orchestrating a scheme in which tens of millions of dollars in bogus expenses were put on the company’s books in an attempt to avoid the payment of more than $34 million in federal income taxes.
Gene Francis Haas, 54, of Camarillo, was sentenced by United States District Judge Christina A. Snyder. In addition to the prison term, which he was ordered to begin serving on January 14, 2008, Haas has already paid a $5 million fine.
As part of a plea agreement, Haas agreed to sign “closing agreements” for tax years 2000 and 2001 and to pay all outstanding taxes, plus penalties and interest. In court today, it was revealed that Haas has paid more than $70 million to the government to resolve his tax issues for the two years he defrauded the government.
“Mr. Haas has now paid the government more than twice the amount of taxes he attempted to avoid paying,” said United States Attorney Thomas P. O’Brien. “This huge monetary penalty, as well as the two-year prison term, should reassure law-abiding citizens that tax evasion can and will be rooted out, and that there are significant ramifications for those who attempt to cheat the government.”
Frank F. Fotinatos, acting Special Agent in Charge of IRS – Criminal Investigation in Los Angeles, stated: “The investigation and prosecution of Gene Haas has resulted in one of the largest tax assessments in a criminal case. Regardless of a person’s position in the community, the IRS is committed to pursuing and prosecuting tax charges whenever and wherever warranted. The prosecution of those individuals who intentionally evade taxes is a vital element in maintaining public confidence in our tax system.”
Today’s sentencing results from Haas pleading guilty in August to conspiring to defraud the Internal Revenue Service. Haas is one of five defendants convicted in relation to three separate tax fraud schemes that he engineered. According to court documents, the tax fraud schemes started in 2000 after Haas paid approximately $8.9 million to settle a patent infringement lawsuit brought against his company by a rival firm. Haas blamed his loss in the case on the federal judge who presided over the lawsuit. In September 2000, Haas created several tax fraud schemes to recover from the government the settlement paid to the rival company, as well as legal fees.
Several co-conspirators previously pleaded guilty, acknowledging their role in one or more of the schemes. Robert Gene Cable, 75, of La Crescenta, pleaded guilty in May and is scheduled to be sentenced on January 28, 2008 for conspiring with Haas and others employed at Haas Automation to engage in a false invoice and payment scheme to defraud the Internal Revenue Service. This scheme involved an exchange of checks between Enmark Aerospace, which Cable operated, and Haas Automation. Paperwork documenting the exchanges created the false appearance that Enmark Aerospace was receiving payments from Haas Automation for selling items that it never actually sold to Haas Automation. Haas personally negotiated the deal with Cable, agreeing to pay Cable a 2 percent kickback fee for swapping the checks. As part of the scheme, Cable received checks from Haas Automation in amounts just under $1 million, and, in exchange, Cable wrote checks, at 98 percent of the face value of the Haas Automation checks, to another company that Haas controlled. In 2000 and 2001, Cable received and cashed, on behalf of Enmark Aerospace, more than $25 million in Haas Automation checks, returning approximately 98 percent to Haas.
Dennis Arthur Dupuis, 51, of Newbury Park, the former general manager of Hass Automation, pleaded guilty in January to conspiring with Haas and Cable. Dupuis also admitted conspiring with Haas in another bogus invoice scheme involving another company, Supermill, owned by Charles Todd. Dupuis is scheduled to be sentenced on January 14, 2008.
As part of his guilty plea, Haas admitted that he orchestrated a third tax fraud scheme in which Haas authorized his company to make large overpayments for the purchases of goods. Haas, Dupuis and another Haas employee caused inflated checks and wire transfers to be issued from Haas Automation. These inflated payment amounts were deducted as cost-of-goods-sold on Haas Automation’s financial records. Haas Automation then requested the return of the overpayments, and Haas and Dupuis caused those returned funds to be deposited into bank accounts other than Haas Automation’s, including Haas’ personal bank account. The false expenses which were recorded on Haas Automation’s 2000 and 2001 financials included payments made to a NASCAR race team and a title company. In this scheme, Haas admitted that his NASCAR team, C & C Motorsport, and Chicago Title Company were directed to return 100 percent of the false payments, which were then deposited into bank accounts other than Haas Automation’s.
Additionally, two other individuals involved in the scheme, Charles Todd, 53, of Minden, Nevada, and Kenneth Greene, 53, of Simi Valley, have also pleaded guilty and are scheduled to be sentenced next year.
This investigation was conducted by IRS-Criminal Investigation in Los Angeles.
CONTACT: Assistant United States Attorney Sandra R. Brown
Chief, Tax Division
Release No. 07-139