North Suburban Businessman Sentenced to Nine Months in Federal Prison for Failing to Pay Taxes on Cash Receipts

CHICAGO — A north suburban man who operated a manufacturing business in Wisconsin was sentenced to nine months in federal prison for failing to pay taxes on more than $2.3 million in cash receipts.

HERBERT C. WATTS, the owner and president of Branko Perforating FWD Inc., of Bristol, Wisc., failed to report cash receipts as income on his taxes for the calendar years 2009 to 2014.  During those years, Branko received more than $2.3 million in cash from the sale of scrap metal to a Cicero-based company.  The scrap sales were not reported in Branko’s business records, and the cash income was concealed from accountants who prepared tax returns for Watts and the company.

The case is part an ongoing investigation of cash transactions in the local scrap metal industry that has resulted in several other convictions.

Watts, 70, of Grayslake, pleaded guilty earlier this year to filing a false tax return.  In addition to the nine-month prison term, U.S. District Judge John Robert Blakey on Tuesday fined Watts $10,000.  Prior to sentencing, Watts paid the taxes he owed to the federal government and the state of Illinois.

“Defendant’s conduct was little more than repetitive evasion motivated by greed,” Assistant U.S. Attorney Patrick King argued in the government’s sentencing memorandum.  “Evasion feeds on itself, reducing respect for the integrity of the tax system and leading to more cheating.”

The sentencing was announced by Zachary T. Fardon, United States Attorney for the Northern District of Illinois; and James D. Robnett, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation Division in Chicago.