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Press Release

Video Gambling Machine Vendor Pleads Guilty to Tax Crime

For Immediate Release
U.S. Attorney's Office, Western District of Wisconsin

MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced that Tom Laugen, 69, of Sun Prairie, Wisconsin, pleaded guilty today in U.S. District Court in Madison, Wisconsin to evading his 2015 federal income taxes.

According to the information filed by the U.S. Attorney’s Office, Laugen owned and operated Global Vending LLC, which operated as a vending company that supplied video gambling machines (VGMs) to Class B alcohol beverage-licensed taverns, restaurants and bowling alleys.  The information alleges that Laugen split the cash profits generated by the VGMs with the tavern owners where the machines were placed, with Global typically receiving 25% of the VGM cash profits, and the tavern owners receiving the remaining 75%.  The gross receipts from the VGMs were subject to Wisconsin sales tax.  The net income from the VGMs were subject to Wisconsin income tax and federal income tax.

At today’s plea hearing, Laugen admitted the he skimmed VGM cash receipts and did not report the skimmed receipts on his state sales tax returns or on his state and federal income tax returns.  The total tax loss from the skim, for both state and federal income taxes, and the state sales taxes, totaled $580,220.56 for the years 2010-2017.

The government proffered at today’s hearing that the investigation involved an IRS-CID Special Agent working as an undercover agent and posing as a buyer of a bar listed for sale by Cherie and Dudley Hellenbrand in August 2017. The bar was Middleton Sports Bowl (MSB) in Middleton, Wisconsin.  On May 31, 2018, the undercover agent met with the Hellenbrands and Laugen at Middleton Sport Bowl.  During that meeting, Laugen told the undercover agent he skimmed the cash receipts from all of his client’s VGMs, including Middleton Sport Bowl, and that he prepared handwritten collection tickets showing much lower numbers for what came in, what came out, and what was the profit.  Laugen told the undercover agent he used the handwritten collection tickets to create fake 1099s that were used to report a portion of the VGM cash receipts to the IRS and to the state of Wisconsin.

Laugen also told the undercover agents that he had fake VGM machine-generated tickets created to support the numbers on the handwritten collection tickets in case there was an audit.  Laugen explained to the undercover agent that, “you got to steal in this business or you ain’t going to make any money.”

Sentencing is set for October 4, 2019, at 10:30 a.m., before Chief U.S. District Judge James D. Peterson at the U.S. Courthouse in Madison, Wisconsin.

The charges against these defendants are the result of an ongoing investigation being conducted by IRS Criminal Investigation and the Wisconsin Department of Revenue, Office of Criminal Investigation.  The prosecution of this case is being handled by Assistant U.S. Attorney Daniel Graber and Special Assistant U.S. Attorney Chadwick Elgersma.

Updated July 12, 2019

Topic
Tax