A Maui couple Thursday were sentenced and fined by a federal judge in Honolulu for various felony tax charges in a multimillion-dollar fraud case, the U.S. attorney's office in Hawaii said.
Charles Loewen, 57, the owner of Paradise Stone & Tile and a former National Football League player, was sentenced to 37 months in prison and three years of supervised release, and ordered to pay a $10,000 fine and $235,288 in restitution. The former San Diego Chargers player was sentenced on felony charges for conspiring to defraud the U.S. and filing a false claim for a tax refund.
U.S. District Judge Derrick K. Watson, who sentenced Loewen, also sentenced his wife, Paula. The 56-year-old accomplice was sentenced to three years' probation and ordered to pay a $5,000 fine and $5,034 in restitution for failing to file taxes in 2007.
Charles Loewen conspired to use a scheme in which he and his wife falsely claimed tax refunds from the Internal Revenue Service totaling $2.4 million, said U.S. Attorney Florence T. Nakakuni, citing the indictment. Loewen, who has a master's degree in business administration, created fake supporting tax documentation, specifically phony 1099-OID forms, to make it appear as if the IRS owed him a large tax refund when, in fact, the IRS did not.
According to information produced in court, Loewen conspired with Gerald Poynter, aka Brother Jerry Love, a 1099-OID scheme promoter who was charged and sentenced in a 1099-OID fraud scheme in Kansas City, Mo., involving a $96 million fraud.
In other information produced in court, Loewen closed two Territorial Savings Bank accounts after the state Department of Taxation levied those accounts. He directed his wife to open an Arizona bank account in her name only to conceal his income, and he then began depositing his Paradise Stone & Tile business income into the Arizona account.
Loewen later submitted false federal tax returns to the IRS claiming that he earned zero net income for three tax years when, in fact, he had earned net income for those years. Loewen has failed to pay more than $127,000 in taxes that he owes the state for 2004, 2005, 2006, 2007 and 2008, according to information produced in court.
Loewen ignored past due notices from the IRS or sent frivolous correspondence to tax authorities for tax years going back to 1995, according to information produced in court.
Also according to information produced in court, Loewen recently disclosed to federal authorities a net worth with his wife of more than $1.5 million, including $260,000 in tools and gold bullion and $695,000 in an offshore account.
The case was investigated by the IRS Criminal Investigation division. The prosecution was handled by Assistant U.S. Attorney Cynthia Lie.