LAWFUEL – Press Release Service – The owner of Oxnard-based Haas Automation, Inc. was arrested this morning on federal tax fraud charges for allegedly orchestrating a scheme in which approximately $50 million of bogus expenses were put on the company’s books in an attempt to avoid the payment of more than $20 million in federal income taxes.
Gene Francis Haas, the owner of Haas Automation and CNC, Inc., was arrested without incident at his Camarillo home by Special Agents with IRS Criminal Investigation. Haas, 54, who is the lead defendant in an 11-count indictment that was returned by a federal grand jury on June 8, is expected to make his initial court appearance this afternoon in United States District Court in Los Angeles.
In addition to Haas, the indictment names Denis Arthur Dupuis, a 51-year-old Newbury Park resident, and Robert Gene Cable, a 73-year-old La Crescenta resident. Dupuis was Haas Automation’s general manager, and Cable was formerly a Haas Automation salesman who operated the Valencia-based Enmark & Associates during the time of the scheme.
The scheme allegedly started in 2000 after Haas paid approximately $8.9 million to settle a patent infringement lawsuit brought against it by a rival firm. According to the indictment, Haas blamed his loss in the case on the federal judge who presided over the lawsuit. In September 2000, Haas allegedly created several tax fraud schemes to recover from the government the $8.9 million plus legal fees that he paid the rival company.
According to the indictment, Haas conspired with Dupuis, Cable and others to create bogus invoices and to pay these fictitious bills with Haas Automation checks. In two conspiracies alleged in the indictment, Hass paid millions of dollars for non-existent industrial equipment from Enmark and Supermill, Inc., a Carson City, Nevada company owned by Charles Todd. Haas Automation deducted these payments as expenses. However, Enmark and Supermill returned 98 percent or 99 percent of the money to CNC, Haas’s other company. According to the indictment, this bogus invoice scheme allowed Haas Automation to deduct more than $23 million in false expenses during 2000 and 2001, when in reality nearly all of that money was returned to Haas through the payments to CNC.
Charles Todd, a resident of Minden, Nevada, who made his first court appearance this morning, has agreed to plead guilty to tax evasion.
The indictment also alleges a second tax fraud scheme in which Haas directed 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 costs-of-goods-sold on Haas Automation’s financial records. Haas Automation then requested refunds on the overpayments, and Haas and Dupuis caused those refunds to be deposited into bank accounts other than Haas Automation’s, including Haas’ personal bank account. Furthermore, the indictment alleges that false expenses were recorded on Haas Automation’s 2000 and 2001 financials after payments were made to a NASCAR race team and a title company. In this scheme, the NASCAR team and the title company were directed to return 100 percent of the payments, which were then deposited into bank accounts other than Haas Automation’s. According to the indictment, this scheme resulted in more than $12 million in false expenses.
“These deceptive and elaborate tax evasion schemes were devised to intentionally evade the income tax obligations of Mr. Haas and his company,” said IRS Special Agent-in-Charge Kenneth J. Hines. “IRS Criminal Investigation will continue to aggressively pursue corporations and individuals who attempt to conceal their true income from the Internal Revenue Service through sham transactions. The American public can feel confident that our tax system works.”
According to the indictment, the tax loss resulting from these various fraud schemes is more than $20 million.
Haas, Dupuis and Cable are charged with conspiracy in the Enmark scheme. Haas and Dupuis are charged with conspiracy in the Supermill and the overpayment schemes.
Haas alone is charged with subscribing to false tax returns for the years 2000 and 2001. Haas is also charged with two counts of witness intimidation for threatening one co-defendant and directing Todd to make false testimony to investigators.
Cable is charged with four counts of wire fraud for making misrepresentations to a company that had sued Enmark.
An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.
The conspiracy counts each carry a maximum penalty of five years in federal prison. Subscribing to a false tax return carries a maximum penalty of three years in prison, wire fraud carries a maximum penalty of 20 years in prison, and witness intimidation carries a maximum penalty of 10 years in prison.
Dupuis and Cable will be summoned to appear in federal court for an arraignment in the coming weeks.
A fifth defendant in the case, Kenneth Green, has agreed to plead guilty to submitting a false document to the IRS. Greene, a Simi Valley resident, was the controller at Haas Automation from mid-2001 through 2003.
CONTACT: Assistant United States Attorney Sandra R. Brown
Chief, Tax Division