|For Immediate Release
Case # 03HF1207
December 19, 2011
|Susan Kang Schroeder
Chief of Staff
MARRIED COUPLE CONVICTED OF FAILING
TO PAY TAXES ON OVER $180 MILLION
IN UNREPORTED INCOME FROM
POWER PLANT REFURBISHING BUSINESS
SANTA ANA – A formerly married couple was convicted Friday of failing to pay taxes on over $180 million in unreported income from their power plant refurbishing business. Richard Engel pleaded guilty Dec. 16, 2011, to four felony counts of failing to file tax returns for his corporation, three felony counts of filing false personal tax returns, and one felony count of failing to file a personal return. The defendant also admitted sentencing enhancements for fraud in excess of $500,000 causing a loss in excess of $1 million. Richard Engel faces a sentence up to 12 years and eight months in state prison at his sentencing Aug. 3, 2012, in Department C-40, Central Justice Center, Santa Ana.
Richard Engel’s then-wife Jolene Engel pleaded guilty Dec. 16, 2011, to one felony count of failure to file tax returns for her corporation and one felony count of failing to provide material information in a tax return. She faces a sentence up to five years and eight months at her sentencing Aug. 3, 2012 , in Department C-40.
Both defendants are required to pay the California Franchise Tax Board (FTB) approximately $1.2 million prior to sentencing. They will also be required to pay over an additional $2 million in restitution as a term of their sentences.
Facts of the Case
Beginning in 1998, the defendants operated Powerplant Maintenance Specialists, Inc. (PMSI), a business that specialized in contracting for the refurbishment of power facilities. Jolene Engel acted as president of PMSI until June 30, 2001, when Richard Engel took over that role. Richard Engel was also Chief Financial Officer (CFO) of the company, negotiated all contracts, handled company operations, and directed PMSI’s financial affairs.
Between 1998 and 2001, the company had a gross revenue of over $180 million.
In October 2000, Richard and Jolene Engel entered PMSI into a contract with AES Corporation (formerly Southern California Edison) to refurbish its Huntington Beach power plant for approximately $108 million. The contract called for AES to make bi-weekly $6.13 million payments to PMSI to obtain a discount on the contract price. The project was estimated to take 90 days from the date the project received the required permits, and the contract called for completion of the project by June 1, 2001.