CINDY ONDRACEK, 49, of Port Orchard, Washington, was sentenced today in U.S. District Court in Tacoma to three years of probation and to a $30,000 fine. She and her husband will also face civil actions by the Internal Revenue Service for their back taxes. 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. In March 2010, ONDRACEK entered a guilty plea admitting that between 2002 and 2005, she failed to pay income tax on more than $197,000 in income from the theaters. At sentencing U.S. District Judge Ronald B. Leighton said, “when you cheat on your taxes, you cheat everyone, your neighbors, your friends, everyone, not just the government.”

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.

At sentencing, United States Attorney David Reese Jennings noted that Ms. Ondracek had never filed returns in her name in her entire life. Both Ondraceks had been battling the IRS since 1987. IRS records showed that they stopped filing tax returns in 1987, filed once in 1999, and didn’t file again until after the current criminal investigation began in 2007. Although they refused to pay their taxes, they had no compunctions about sending their children to taxpayer supported colleges, and no shyness about using the benefits of the federal bankruptcy court to protect themselves from creditors.

The case was investigate 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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