United States Attorney
Northern District of Texas

1100 Commerce St., 3rd Fl.
Dallas, Texas 75242-1699

Telephone (214) 659-8600
Fax (214) 767-0978

COMPANY OWNER INDICTED FOR
FAILURE TO WITHHOLD EMPLOYEE TAXES

United States Attorney Jane J. Boyle announced that a federal grand jury in Fort Worth, Texas, returned a 27-count indictment yesterday against Richard Michael Simkanin, the owner of Arrow Custom Plastics (Arrow). Simkanin was arrested this morning and made his initial appearance before United States Magistrate Judge Charles Bleil this afternoon. During the hearing, the government filed a motion to detain Simkanin on the basis of flight risk. At the conclusion of the hearing, the Judge Bleil ordered Simkanin to be temporarily detained and a detention hearing was scheduled for Wednesday, June 25, 2003, at 11:00 a.m. before United States Magistrate Judge Irma Ramirez in Dallas, Texas.

The indictment includes 12 felony counts of tax-related offenses, alleging that from January 2000 through December 2002, Simkanin failed to withhold, collect, and account for the taxes due on the wages of Arrow employees. In addition, the indictment includes 15 felony counts of filing false claims for refunds to the IRS. An indictment is an accusation by a federal grand jury and a defendant is entitled to the presumption of innocence unless proven guilty. If convicted on all counts, however, Richard Michael Simkanin faces a maximum statutory sentence of 135 years imprisonment, and a $6.75 million fine.

According to the indictment, from April 1982 through at least 2001, Arrow was engaged in the business of the production of customized plastic molds for various manufacturers. Richard Michael Simkanin was the President of Arrow, and at the time of its incorporation, the sole shareholder of Arrow.

The indictment further alleges that from 1993 through March 2000, Simkanin employed a Fort Worth, Texas, accounting firm to prepare various corporate tax returns for Arrow. During this time, an Arrow bookkeeper prepared the IRS Forms 940 and 941 required to enable Arrow to collect, account for, and pay over to the IRS various taxes from the wages of Arrow employees. In late 1999, however, Simkanin instructed his bookkeeper to no longer collect, account for, and pay over various taxes from the Arrow employees' wages. Following Simkanin's decision, the Fort Worth accounting firm withdrew from representation of Arrow in connection with tax services.

In addition, the indictment further alleges that from January 2000 through December 2002, Simkanin willfully failed to collect $175,032 in taxes due on wages of Arrow employees totaling $2,287,991. The indictment alleges that on January 28, 2000, Simkanin filed false and fraudulent claims for refund when he requested refunds on taxes totaling $234,515 which Simkanin had previously withheld from Arrow employees during the period from March 1997 through December 1999.

U.S. Attorney Boyle praised the investigative efforts of the Internal Revenue Service - Criminal Investigation (IRS-CI), Dallas Field Office. "Let me make it perfectly clear that compliance with our nation's tax laws is not a volunteer program. And anyone who encourages others to break federal tax laws will suffer the full impact of a federal prosecution," said U.S. Attorney Boyle.

Assistant United States Attorney David Jarvis is the prosecuting attorney.

# # #