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Justice News

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

FOR IMMEDIATE RELEASE
Friday, October 12, 2018

Owner of Sports Memorabilia Stores Sentenced to Prison for Failing to Pay Employment Taxes

Defendant Failed to Pay Employment and Social Security Taxes on more than 50 Employees for the last Ten Years

          The owner of two Pierce County sports memorabilia and card gaming shops was sentenced  today in U.S. District Court in Tacoma to 30 days in prison, ten months of home detention with electronic monitoring, three years of supervised release and $234,769 in restitution for failing to pay employment taxes on more than 50 employees, announced U.S. Attorney Annette L. Hayes.  DONALD A. KNUTSEN, 54, owned Northwest Sportscards, which had locations in Tacoma and University Place, Washington.  KNUTSEN pleaded guilty in April 2018, admitting that between 2008 and 2016 he withheld a total of $234,769 in income, Social Security, and Medicare taxes from the paychecks of at least 51 different employees, but failed to accurately report and pay the tax withholdings and an additional $122,350 in employer-owed taxes to the Internal Revenue Service.  At sentencing U.S. District Judge Robert J. Bryan said, “Our whole government system is based upon citizens voluntarily completing their paperwork and paying taxes.  Our system, the very foundation of our liberties, is dependent on citizens doing this civic duty.”

                “This defendant not only failed to pay his own taxes, he stole funds he was supposed to pay for Social Security and Medicare taxes for his employees,” said U.S. Attorney Annette L. Hayes.  “Employees rely on their employers complying with the law and protecting their hard earned retirement benefits, not succumbing to naked greed.  As a result of this prosecution, not only is the defendant spending time in prison, he is required to pay restitution so that his victims can be made whole.”

          According to records filed in the case, KNUTSEN operated the two sports cards and memorabilia stores for more than 27 years.  The investigation revealed that as early as 2002, KNUTSEN stopped paying employment taxes, including Social Security and Medicare taxes on his employees.  KNUTSEN withheld the money from the employee paychecks but never paid it to the IRS or filed the required forms accounting for the payments.  Instead, KNUTSEN used the money to acquire inventory and promote his business.  In addition, KNUTSEN failed to file any personal income tax returns after 2000.

            Before today’s hearing KNUTSEN delivered a check to the court for $82,500 as a partial payment for his $234,769 restitution obligation.  In addition, after the IRS calculates his civil tax liability and interest, KNUTSEN will pay that amount as well.  

          Because KNUTSEN was not filing tax forms or paying taxes to the IRS, the employees working at his shops did not accrue individual Social Security benefits during the relevant years.  Under the terms of his plea agreement, KNUTSEN will work with the IRS to correct those past tax records. 

          The case is being investigated by the Internal Revenue Service Criminal Investigation.  The case is being prosecuted by Assistant United States Attorney Steven Masada.

Topic(s): 
Tax
Contact: 
Press contact for the U.S. Attorney’s Office is Public Affairs Officer Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.
Updated October 12, 2018