FORMER OWNERS OF SEATTLE COMPANY PLEAD GUILTY TO FILING FALSE INCOME TAX RETURNS
Men had Company Pay their Personal Expenses, Failed to Report as Income
PAUL AUSTIN, 58, of Ellensburg, Washington and PAUL WERLINK, 61, of Camano Island, Washington, pleaded guilty today in U.S. District Court in Seattle to Making and Subscribing False Income Tax Returns. In their respective plea agreements, PAUL AUSTIN and PAUL WERLINK admitted that during the calendar years 1998 through 2003, PAUL AUSTIN, who was formerly the president, and a fifty percent owner of, The Safety Team, Inc. and PAUL WERLINK, who was formerly the corporate secretary, and the other fifty percent owner, directed that certain of their personal expenses be paid by the corporation. Their failure to report these payments as income caused a material understatement of their personal income and the income tax due and owing for each of these calendar years.
The Safety Team, Inc, is a business located at 670 South Lucile Street in Seattle, Washington, which specialized in the installation of fire extinguishing systems, the sales of fire prevention equipment, and consulting on fire safety. For each year in question, the aggregate amount of these payments for personal expenses was omitted from PAUL AUSTIN’s and PAUL WERLINK’s personal income tax returns, but was included as a corporate expense on the corporate income tax return of The Safety Team, Inc. In addition to understating their personal income, PAUL AUSTIN’s and PAUL WERLINK’s actions also caused a material overstatement of business expenses and a material understatement of the corporate income tax due and owing on the corporate returns for these same years. PAUL AUSTIN and PAUL WERLINK later sold their interests in The Safety Team, Inc., and are no longer involved as owners of the business.
Under the terms of the plea agreement, this offense can be punishable by imprisonment up to three years, a fine of up to $250,000, or both, together with the costs of prosecution; and a period of supervision following release from prison of one year. Defendants may also receive a sentence of probation of up to five years. PAUL AUSTIN will make restitution to the Internal Revenue Service in the amount of $164,201, plus fines and penalties. PAUL WERLINK will make restitution to the Internal Revenue Service in the amount of $50,389, plus fines and penalties. Both men will be sentenced by U.S. District Judge Ricardo S. Martinez on January 25, 2008.
This case was investigated by the Internal Revenue Service - Criminal Investigation (IRS-CI). The case was prosecuted by Assistant United States Attorney Robert Westinghouse.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110.