Former KC Business Owner Sentenced for Tax Crime

KANSAS CITY, Mo. – The former owner of a Kansas City, Missouri, business was sentenced in federal court today for obstructing the government’s effort to collect more than $378,000 in taxes owed.

Barrett Prelogar, 48, of Leawood, Kansas, was sentenced by U.S. District Judge Stephen R. Bough to 18 months in federal prison without parole. The court also ordered Prelogar to pay $263,959 in restitution.

On April 5, 2019, Prelogar was found guilty at trial of corruptly endeavoring to impede the due administration of the internal revenue laws. Prelogar engaged in a five-year-long scheme to avoid paying $378,207 in taxes that had been due and owing for almost 15 years. Prelogar committed multiple deliberate acts in order to obstruct or impede the enforcement of the IRS laws.

Prelogar was a founding partner in now-defunct Winntech Digital Systems, Inc. The Kansas City, Missouri, company primarily produced electronic displays to be used in stores or at trade shows.

Prelogar failed to pay over to the government the payroll taxes withheld from Winntech employees’ paychecks in 2002 and 2003. He then obstructed the collection process of the Trust Fund Recovery Penalty, which had been assessed against him personally for the unpaid trust fund taxes of Winntech. He also obstructed the IRS’s collection of the income taxes he owed for 2008.

On Oct. 28, 2009, Prelogar filed his 2008 tax return. The return reported over $500,000 in gross income and a tax due and owing of $120,103. Prelogar did not submit any payments with the 2008 tax return. Yet, from November 2009 through April 2011, he paid a total of more than $362,000 towards a house at the Lake of the Ozarks, a house near the Plaza in Kansas City, Missouri, a house in Leawood, Kansas, a Porsche, a Jeep, and a boat. During that time, he made no payments on his 2008 tax debt.

Prelogar engaged in several strategies from May 2011 to March 28, 2016, to obstruct the collection of taxes and penalties he owed to the government. Prelogar used corporate funds to pay his personal expenses, structured cash withdrawals from Winntech’s bank account to avoid federal bank reporting requirements, and cashed his payroll checks from his wife’s company, Bare Skull Innovation, LLC, rather than placing the money into a personal bank account, all to avoid IRS collections.

The total tax loss was $378,207. The loss amount consisted of the Trust Fund Recovery Penalty amounts of $167,237, assessed for the first quarter of 2003, and $96,721 for the second quarter of 2003, as well as the 2008 personal income tax due and owing at the time of the indictment, $114,248.

This case was prosecuted by Assistant U.S. Attorney Paul S. Becker and Trial Attorney David Zisserson of the U.S. Department of Justice’s Tax Division. It was investigated by IRS-Criminal Investigation.