2007-08-31 / Front Page
Haas pleads guilty in tax evasion case
Gene Haas, owner of Oxnard-based Haas Automation, pleaded guilty Monday to a federal conspiracy charge in connection with a tax evasion scheme that enabled him to avoid paying more than $34 million in federal income taxes for the years 2000 and 2001, according to prosecutors.
Haas agreed to a plea agreement in U.S. District Court in Los Angeles before U.S. District Judge Christina A. Snyder. He is expected back in court Nov. 5 for sentencing.
Last year, Haas had pleaded not guilty to federal tax evasion charges.
"Gene made a mistake when these returns were filed," said Brian Hennigan, Haas' attorney, in a prepared statement "Gene has been anxious to have this matter resolved and brought to a satisfactory conclusion."
According to prosecutors, Haas' plea agreement calls for a two-year prison sentence and the repayment of nearly $70 million. The amount includes interest and penalties on the $34.2 million in taxes that federal officials said Haas did not pay.
"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 the IRS' commitment to pursue tax crimes without regard to a person's position or stature in the community," said Debra D. King, special agent in charge of the Internal Revenue Service's criminal investigation unit in Los Angeles.
Haas, 54, was arrested last year at his Camarillo home on federal charges of tax fraud. The U.S. attorney's office in Los Angeles named him the lead defendant in an 11-count indictment brought by a federal grand jury.
Haas was involved in three separate schemes in which he billed phony business expenses to shell companies to avoid paying federal taxes, according to court documents.
Haas is the fifth defendant to admit guilt in the complicated tax scheme.
Two of the other men who pleaded guilty are also Ventura County residents- Kenneth Greene, 53, of Simi Valley and Dennis Arthur Dupuis, 51, of Newbury Park. Both are expected to be sentenced next year.
Robert Gene Cable, 73, of La Crescenta was also indicted and pleaded guilty. He is to return to court next year for sentencing.
Investigators said Haas' scheme began in 2000 when he tried to recoup $8.9 million he had lost to a rival firm in a patent infringement lawsuit.
Court records showed Haas worked with Dupuis and Cable to buy millions of dollars of nonexistent industrial equipment from Enmark Aerospace and Supermill Inc., a Nevada-based shell company owned by Charles Todd.
Todd pleaded guilty to tax evasion last year and is to be sentenced in 2008.
When they were paid, the shell companies returned 98 percent of the money to CNC, a company owned by Haas.
Using CNC to launder the money, Haas Automation claimed federal tax deductions on more than $50 million in fraudulent expenses from 2000 and 2001, investigators said.
Dupuis and Haas also worked together on a complicated money laundering scheme that illegally moved money from Haas Automation to multiple bank accounts, including Haas' personal account.
Haas also reported to the IRS nearly $12 million in false invoices he purportedly incurred as co-owner of a NASCAR team and another company in 2000 and 2001, investigators said.
They became aware of the scheme when John Phillips, a former Haas Automation executive, admitted his involvement with the scheme to the FBI in April 2001, according to the court.
Although Haas was freed on $10 million bail in June 2006, federal prosecutors sought to put him back behind bars. They said he posed a flight risk and had a history of witness intimidation that could have affected the outcome of the case.
"The prosecution of individuals who intentionally underreport their income and evade taxes is a vital element in maintaining public confidence in our tax system," King said. "We should not expect the honest taxpayer to foot the bill for those for those who attempt to defraud the IRS."
Haas Automation officials said in a press release that dayto-day operations at the company's machine tool manufacturing plant will not be affected.
A company spokesperson said the Haas Automation's sales numbers have not been impacted by the investigation.
The 24-year-old company reported $740 million in revenue for 2006- almost 30 percent over the year before. According to its website, the company employs about 1,100 workers in the county.