“Lazy Lion” Marijuana Business Owners Guilty Of Failing To Pay Over $3,000,000 In Federal Taxes
DENVER – Andrew C. Poarch, age 31, of Colorado Springs, Colorado, pled guilty February 13, 2019 in front of U.S. District Court Judge Robert E. Blackburn to filing a false federal income tax return, announced U.S. Attorney Jason R. Dunn and Internal Revenue Service – Criminal Investigation Special Agent in Charge Steven Osborne. Poarch was charged by Information on December 20, 2018 and is scheduled to be sentenced on May 22, 2019.
According to information contained in the information and plea agreement, Poarch and his wife opened a marijuana business in Colorado Springs in approximately January of 2013. During the time from January 2013 through August of 2016, the couple owned, operated and managed the business, named “The Lazy Lion.” Customers could go to the store and join a private club by signing a customer agreement. The Lazy Lion member agreement allowed for members to visit the business and acquire marijuana for a set price. The fee structure for the business included a one-time initial membership fee, an entry fee for each subsequent visit, and a set fee for each purchase of marijuana. The Lazy Lion was never registered as a recreational dispensary within the State of Colorado.
The Lazy Lion obtained its supply of marijuana from a series of grow operations which cultivated and prepared the marijuana for distribution at various warehouses located in the Colorado Springs area. Poarch and his wife owned and controlled the growing operations. Once the marijuana was received at The Lazy Lion, customers could enter the business, purchase marijuana, and if desired, consume the marijuana on the premises.
The Lazy Lion was a cash only business. The Lazy Lion maintained an ATM within the dispensary, which allowed members to obtain cash within the premises.
The Lazy Lion generated substantial profits during the course of its operations. In order to track its cash revenues, the company used a point of sale program that recorded the receipt of all cash funds collected from customers at the business. Records from the point of sale system were collected and analyzed during the investigation of the business and it was determined that during the period of the scheme, the gross revenues for the business approximated $10,792,320. Federal agents then determined the business expenses and the income.
On or about September 29, 2015, Poarch and his wife signed a Form 1040, Individual Income Tax Return, signed under penalties of perjury, and represented that, to the best of their knowledge, the information contained in the return was true, correct, and complete. Among other information, the 2014 tax return stated that their adjusted gross income was $19,294 and that they were due a refund from the IRS. In fact, Poarch was aware that their adjusted gross income was approximately $2,807,761 and the couple owed the IRS tax of $1,061,485.
The parties failed to file personal income tax returns for the 2015 and 2016 tax years. Their net income for the 2015 tax year was $4,187,449. Their net income for the 2016 tax year was $1,325,575.
As a result of the conduct, Poarch and his wife failed to pay the IRS a total of $3,126,245 in taxes due and owing.
This case was investigated by the Internal Revenue Service – Criminal Investigation and the FBI Safe Streets Task Force in Colorado Springs.
This case is being prosecuted by Assistant U.S. Attorney Tim Neff.