News and Press Releases

Movie Theater Owner Structured Deposits to Avoid Reporting Laws

March 5, 2010

CINDY ONDRACEK, 49, of Port Orchard, Washington, pleaded guilty today in U.S. District Court in Tacoma to Tax Evasion. Since 1986 ONDRACEK and her husband have owned and operated a three-screen drive-in movie theater in Port Orchard. Between August 2002 and 2005, the couple opened and operated a second theater, Redwood Cinema, in Bremerton, Washington. ONDRACEK admitted in court today that between 2002 and 2005, she failed to pay income tax on more than $197,000 in income from the theaters. ONDRACEK faces up to five years in prison and a $250,000 fine, plus interest and penalties on the tax loss, when she is sentenced by U.S. District Judge Ronald B. Leighton on May 27, 2010.

According to the indictment and plea agreement, over a five year period the movie theaters owned by ONDRACEK and her husband took in more than $2 million in gross receipts - much of it in cash. ONDRACEK structured the deposits into her bank account so that the cash deposits were under the $10,000 benchmark that generates reports to federal investigators. Despite the large income, ONDRACEK and her husband failed to file income tax returns for those years. As charged in the indictment, CINDY ONDRACEK’s share of the tax liability for those years was $68,000. According to the plea agreement, both CINDY ONDRACEK and her husband Jack Ondracek provided information to their accountant, and knew that they needed to file and pay income taxes, but it was CINDY ONDRACEK who attempted to shield the information on income from government regulators by structuring the cash deposits. At one point their bank formally sent them a warning notifying them of the currency reporting rules.

In addition to the criminal penalties, ONDRACEK faces civil tax, penalties, and interest. ONDRACEK is required to pay costs of prosecution.

The case was investigated by Internal Revenue Service Criminal Investigation (IRS-CI). The case is being prosecuted by Assistant United States Attorneys David Reese Jennings and Annette Hayes.

For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.

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