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Press Release

Video Gambling Machine Vendor Sentenced for Tax Evasion

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 Thomas Laugen, 69, Sun Prairie, Wisconsin, was sentenced today by U.S. District Judge James D. Peterson to 1 year and 1 day in federal prison for income tax evasion.

On July 12, 2019, Laugen pleaded guilty to a one-count information that charged him with 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.

As part of the plea agreement, 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 over $548,000 for the years 2010-2017.

This tax investigation started with a U.S. Department of Treasury 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, WI.  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.”

At today’s sentencing, Judge Peterson noted that a prison sentence was required in this case to promote a general deterrence message to the business community.  The judge explained that people need to know they must report all of their income and pay taxes -- and if they cheat, they will go to prison.  Judge Peterson added that he was “appalled by the idea that it is okay to cheat on your taxes because everyone else in the business community does as well and that the only way to make money is to cheat.”  Judge Peterson noted such an idea is wrong and a prison sentence is needed to promote a respect for the law.

Judge Peterson also ordered Laugen to pay $548,416.43 in restitution to the IRS and Wisconsin Department of Revenue noting that, “restitution is not punishment – it is only paying back the loot you took.”

The case against Laugen is 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. Attorneys Daniel Graber and Chadwick Elgersma.

Updated June 19, 2020