Feds: East Washington man evaded taxes to finance gambling habit
A federal grand jury has accused an East Washington man of orchestrating far-reaching tax evasion schemes that included shirking employer taxes, scamming investors and spending federally backed small-business loan money on lavish personal items like Las Vegas gambling jaunts and a luxury car for a family member.
George Retos Jr., 69, has been indicted on 13 counts of tax evasion, wire fraud, conspiracy to defraud the United States, false bankruptcy declaration and unlawful possession of a firearm by a felon, U.S. Attorney Scott W. Brady announced Thursday.
An attorney for Retos could not immediately be reached.
Grand jury flags alleged fraud on several fronts
Among specific allegations in the 13-count indictment:
• Retos allegedly defrauded a preferred lender of the Small Business Administration in connection with $2 million in loans issued to two entities he controlled, Prime Plastics and Branikas Investments LLC.
The indictment accuses Retos of misappropriating money to fund personal expenses — including a $41,000 BMW for a relative and tens of thousands of dollars gambled in Western Pennsylvania and Las Vegas.
• To conceal his real income and avoid paying hundreds of thousands of dollars in business taxes, Retos allegedly placed his business interests under the names of nominees. He paid for personal expenses using funds from Prime Plastics, Branikas Investments and a third entity he controlled, Plastic Power.
Retos also used his company's bank accounts to make ATM withdrawals at casinos, the indictment said.
He faces a conspiracy charge for allegedly trying to avoid Prime Plastic's payroll taxes by transferring its employees to Plastic Power — which then also failed to pay taxes.
• Retos is accused of trying to defraud the state's unemployment compensation program by reducing the salaries of his employees and telling them to make up the difference via unemployment benefits, “knowing full well that the employees were ineligible” for such benefits, federal prosecutors said.
Retos also is accused of lying when he filed for bankruptcy on behalf of Prime Plastics in February 2013.
The weapons charge stems from Retos possessing a .38-caliber handgun in spite of a prior tax evasion conviction that prohibited him from carrying a firearm, according to the indictment.
Court records reveal prior tax, money problems
Retos has a decades-long history of run-ins with the IRS and legal money troubles.
He used to be an attorney. He surrendered his law license after a federal jury convicted him in 1993 of several counts of tax evasion, making a false credit application, mail fraud and interstate transportation of stolen property.
The judge sentenced Retos to more than two years in prison. He finished the sentence in December 1996, court and Bureau of Prison records show.
Washington County civil court records show Retos has been named in about 120 cases since 1984. He filed at least 10 of those.
Most were part of a series of lawsuits seeking business collections and liens for unpaid taxes, filed by the federal, state and county governments as well as the Washington School District and East Washington.
In August 2010, Retos had agreed to pay about $1.04 million in back taxes to settle a 2009 lawsuit by the IRS.
But instead of paying the judgment, Retos sued the IRS in February 2012 in bankruptcy court. He claimed he should not have to pay the money because the agency waited more than three years to come after the taxes.
The IRS fired back that the time limit does not apply to someone who knowingly evades paying taxes, fails to file returns and spends large amounts of money on gambling and stock trading rather than paying what he owes to the federal government.
As the case advanced, the IRS and FBI demanded Retos turn over information on his bank and credit accounts, subpoenaed several casinos and executed search warrants at his home and business.
The new, 13-count criminal indictment against Retos was issued Wednesday.
If convicted on all charges, Retos could face decades in federal prison and up to $3 million in fines.
“The special agents of the IRS-Criminal Investigations remain diligent in their pursuit of those who attempt to undermine the system by committing tax fraud and bankruptcy fraud,” IRS acting Special Agent-in-Charge Ed Wirth said Thursday in a statement.
Assistant U.S. Attorney Mary McKeen Houghton and Eric G. Olshan are prosecuting the case with help from the IRS, FBI, Department of Labor and Office of Inspector General.
Natasha Lindstrom is a Tribune-Review staff writer. Reach her at 412-380-8514, firstname.lastname@example.org or via Twitter @NewsNatasha.