Car Wash Executives Sentenced to Prison for Tax Evasion Scheme
RICHMOND, Va. - Thomas Ellis, 63, and Brenda Ellis, 59, of Richmond, Virginia, were sentenced to 18 months’ and 12 months’ imprisonment, respectively, for conspiring to defraud the Internal Revenue Service of more than $133,000 in tax revenue from 2003 through 2007. Neil H. MacBride, United States Attorney for the Eastern District of Virginia; and Rebecca Sparkman, Special Agent in Charge, IRS Criminal Investigation, Washington DC Field Office, made the announcement after they were sentenced by the Honorable Henry E. Hudson.
Thomas and Brenda Ellis were the owners of Buzz Thru Car Washes, an automated car wash service that provided washing, waxing, vacuuming and other vendor services after a customer deposited cash or coins into a machine. The Ellises reported the income and expenses of Buzz Thru each year on their Federal individual income tax returns, Forms 1040, Schedule C, entitled “Profit or Loss From Business.”
According to documents filed with the Court, from 2003-2007, Thomas Ellis would bring the daily car wash cash receipts to the home office where Brenda Ellis would account for the cash in two sets of records and ledgers. On one set, she recorded the true amount of cash received by the two car washes. These amounts were summarized monthly and recorded on ledgers clipped by magnets to the back of a desk in the Ellis’ home office. On another set, however, she recorded a lesser amount of cash received. This set was kept in a separate area of the office.
When the defendants went to the bank, they deposited only the lesser amount of cash recorded in the second set of records. They kept the rest of the cash in a safe at the house or used the funds to maintain their lifestyle.
When the defendants met with their accountant to prepare their income tax returns, they only reported as income the lesser amount of cash, thereby understating their income on their income tax returns. Between 2003 and 2007, the defendants understated $386,397 in income from their car wash businesses on their Schedule C, resulting in the non-payment of $133,163 in income tax due to the United States.
The case was investigated by the Criminal Investigation Division of the Internal Revenue Service. Assistant United States Attorney David T. Maguire is prosecuting the case for the United States.A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.usdoj.gov/usao/vae. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov or on http://pacer.uspci.uscourts.gov.