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WASHINGTON, D.C. - Michael Richard Molus III (a.k.a. Rick Molus) and Jason C. McCann pleaded guilty today, in United States District Court in San Diego, California, to the criminal offense of willfully of failing to provide information to the Internal Revenue Service regarding their individual federal income taxes.

This brings to seven the total number of defendants who have pleaded guilty under related plea agreements tendered on November 29, December 4, and December 6, 2001. United States Magistrate Judge Cynthia G. Aaron heard the pleas from co-defendants Michael R. Molus, Carol A. Molus, Mark S. Molus, Michael Richard Molus III (a.k.a. Rick Molus), Matthew K. Molus, Jason C. McCann and Dwayne L. Ellison. United States District Judge Napoleon A. Jones, Jr., scheduled hearings for all seven defendants on February 28, 2002. It is expected that Judge Jones will formally accept the pleas and impose sentences on that date.

Michael R. Molus and Carol A. Molus pleaded guilty on November 29, 2001, to one count each of conspiracy to file false federal individual income tax returns for the years 1991 through 1994. Michael and Carol Molus admitted that the scheme resulted in a loss of $871,000 in federal income tax revenue, according to their plea agreements.

"Once again, IRS criminal investigators and attorneys from the Tax Division of the Department of Justice have vindicated the interests of the people of the United States," said Eileen J. O'Connor, Assistant Attorney General for the Justice Department's Tax Division. "These defendants cheated America's taxpayers out of nearly one million dollars. This case demonstrates that the Department of Justice is committed to taking appropriate action to enforce America's tax laws."

The defendants were indicted on August 15, 2000. An eighth co-defendant, Enrique Gomez Avila, is a Mexican citizen who remains a fugitive. According to the indictment, Michael and Carol Molus owned and operated Mexmil, a company formed in approximately 1978 and based in Santa Ana, California. Mexmil manufactured aircraft fuselage insulation blankets at a facility in Mexicali, Mexico. It then sold the blankets to Boeing, an aircraft manufacturer. Michael Molus is the father of Mark Molus, Rick Molus and Matthew Molus. McCann, Ellison and the three Molus sons were employed by Mexmil at various times between 1991 and 1995, according to the plea agreements.

Mark Molus, Matthew Molus and Dwayne Ellison pleaded guilty on December 4, 2001, to one count of willfully failing to provide information to the Internal Revenue Service regarding their individual federal income taxes.

According to the indictment, the tax fraud was accomplished principally through the fraudulent overstatement of Mexmil's business expenses by approximately $1.8 million. Instead of paying for Mexmil operations, Michael and Carol Molus used the money in other ways. Diverted proceeds were used to make up part of the down payment for a vacation home in Florida and to decorate the home and make purchases at Neiman Marcus. The indictment also charged that Mexmil funds were distributed to Mark Molus, Mark Molus, Rick Molus, Jason McCann and Dwayne Ellison, and that the men failed to report the income to the Internal Revenue Service.

People convicted of conspiracy to file false income tax returns can be sentenced to serve up to five years in federal prison and to pay a fine of up to $250,000. Those convicted of failure to provide material information to the Internal Revenue Service can spend up to one year in prison and be fined up to $100,000.

The Internal Revenue Service's Criminal Investigation Division conducted the investigation that resulted in the seven guilty pleas in this case. The case is being prosecuted by Trial Attorneys Lori A. Hendrickson and Danny N. Roetzel, with the Department of Justice, Tax Division, Western Criminal Enforcement Section.