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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of Washington

FOR IMMEDIATE RELEASE
Friday, May 17, 2019

Former Washington State Bank CEO Sentenced to One Year in Prison for Multi-Year Tax Fraud of more than $865,000

Defendant took $2.3 million in Fees and Failed to Report the Income on His Taxes

          The former Chief Executive Officer of a Pacific Northwest community bank was sentenced today in U.S. District Court in Wisconsin to one year and a day in prison and one year of supervised release and a $150,000 fine for filing a false tax return, announced U.S. Attorney Brian T. Moran.  Between 2010 and 2016, VICTOR KARPIAK, 64, now of La Crosse, Wisconsin, failed to report more than $2.3 million in income on his taxes.  KARPIAK previously served as President and CEO of First Savings Bank Northwest based in Renton, Washington.  He retired in 2013 and moved from the Seattle area. KARPIAK was charged in the Western District Washington, but chose to have the case resolved near his new home in Wisconsin.  U.S. District Judge William M. Conley imposed the sentence.

          According to records filed in the case, between 2010 and 2016, KARPIAK served as a trustee and consultant for a woman who was the beneficiary of a family and a marital trust.  KARPIAK became a trustee because the woman’s late husband was a significant customer for the bank.  Over those years, KARPIAK paid himself fees of $3,265,072 but on his taxes KARPIAK reported less than a third of that income ($943,322).  The tax loss on more than $2,321,750 in income is $867,540.  KARPIAK will pay $867,540 to the IRS as well as any interest or civil penalties the IRS imposes in the case.   The interest alone in this case could total more than $143,647.

          In their sentencing memo, prosecutors noted that that KARPIAK engaged in the tax fraud even as he earned significant salary and benefits as the bank CEO. “Our system of government relies on individuals --- particularly high-earners such as Karpiak --- to pay a modest portion of earnings toward communal projects and programs…  (T)he true victim of Karpiak’s greed remains the public and his fellow taxpayers, from whom he effectively stole,” prosecutors wrote in their sentencing memo.   Now with four homes across two states, multiple luxury vehicles and a pension alone of more than $150,000 annually, KARPIAK did not need to cheat on his taxes to make ends meet.  As part of his sentencing hearing, KARPIAK made a payment on his tax obligation of more than $1 million.

          “Today Mr. Karpiak was held accountable for willfully and intentionally violating his legal duty to declare and pay his taxes,” said Justin Campbell, IRS Criminal Investigation Special Agent in Charge, Seattle Field Office.  “The U.S. tax system works because honest law-abiding taxpayers know that everyone, including corporate officers, are paying their fair share.”

          The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI) and is being prosecuted by Assistant United States Attorneys Steven Masada of the Western District of Washington and Elizabeth Altman of the Western District of Wisconsin.

Topic(s): 
Tax
Contact: 
Press contact for the U.S. Attorney’s Office Western District of Washington is Communications Director Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.
Updated May 17, 2019