LOS ANGELES – LAWFUEL – The Legal Newswire – The owner of Oxnard-based Haas Automation, Inc. pleaded guilty this afternoon to a federal conspiracy charge related to a scheme in which tens of million of dollars in bogus expenses were put on the company’s books during a two-year period in an attempt to avoid the payment of more than $34 million in federal income taxes.
Gene Francis Haas, 54, of Camarillo, pleaded guilty to the felony charge before United States District Judge Christina A. Snyder.
Judge Snyder is scheduled to sentence Haas on November 5. A plea agreement filed last Friday calls for a two-year prison sentence. If Judge Snyder declines to impose the 24-month sentence, Haas or the government will be allowed to withdraw from the negotiated plea agreement.
As part of the plea agreement filed last Friday, Haas agreed to pay $34.2 million in back taxes for the years 2000 and 2001, as well as a $5 million fine. With statutory penalties and interest on the back taxes, Haas owes more than $70 million to the government.
“Tax evasion is not a victimless crime,” stated Debra D. King, Special Agent in Charge of IRS – Criminal Investigation in Los Angeles. “Honest, hardworking Americans pay the price when others choose to evade their tax obligations. The investigation and successful prosecution of Mr. Haas – resulting in prison time and one of the largest tax assessments in a criminal case in recent memory – is indicative of IRS’ commitment to pursue tax crimes without regard to a person’s position or stature in the community. The prosecution of individuals who intentionally underreport their income and evade taxes is a vital element in maintaining public confidence in our tax system. We should not expect the honest taxpayer to foot the bill for those for those who attempt to defraud the IRS.”
Haas is the fifth and final defendant to plead guilty in relation to three separate tax fraud schemes engineered by Haas. 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. 07-106