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2 Couples Face Tax Charges

Indictments for evasion name Newport exec and his ex-wife, and a tax protester and his wife.

September 06, 2003|Jean O. Pasco | Times Staff Writer

Multiple tax-evasion charges were filed Friday by the Orange County district attorney's office against a wealthy Newport Beach energy executive and a high-profile tax protester who ran for governor last year on a platform that paying income taxes is unconstitutional.

Richard "Dick" Engel, owner of Powerplant Maintenance Specialists Inc. in Costa Mesa, and his ex-wife, Jolene Engel, allegedly failed to report $190 million in earnings over four years.

Prosecutors are seeking $11 million in unpaid taxes, penalties and investigation costs from the former couple -- the largest tax-evasion case brought in California through the state Franchise Tax Board.

Dick Engel, 59, and Jolene Engel, 52, surrendered to authorities and were arraigned Friday at the Harbor Justice Center in Newport Beach on multiple felony tax-evasion counts. They each posted bail of $500,000, district attorney spokeswoman Susan K. Schroeder said.

For The Record
Los Angeles Times Wednesday September 10, 2003 Home Edition Main News Part A Page 2 National Desk 2 inches; 58 words Type of Material: Correction
Tax protester -- An article in the California section of Saturday's Orange County Edition incorrectly described George "Nick" Jesson, who was indicted on charges of avoiding state taxes, as a founding member of the We the People Foundation for Constitutional Education. The nonprofit group, which advocates changes in federal and state tax laws, is not a membership organization.

George "Nick" Jesson, 48, a founding member of We the People Foundation for Constitutional Education, and his wife, Trina Thi Vu, 40, are accused of failing to pay taxes on more than $3 million in income from their Huntington Beach electronics company from 1997 to 1999. The state is demanding $500,000 in unpaid taxes, penalties and costs.

Jesson was arrested Friday morning by state tax investigators after stopping for coffee in Fountain Valley; his wife was arrested later.

They were being held Friday on $250,000 bail each, with arraignment scheduled Tuesday on felony charges of filing false tax returns.

At a press conference with state tax officials, Dist. Atty. Tony Rackauckas said tax evasion penalizes law-abiding residents who follow the rules.

"Everyone has to pay his or her fair share of taxes," said Rackauckas, while showing photos of the Engels' luxurious home and the Four Seasons Hotel in Newport Beach, where Dick Engel was reportedly a frequent guest. "No one has the right to refuse to pay their taxes and spend their money on luxury goods."

While married, the couple lived lavishly, he said, allegedly spending company funds on jewelry, cars, Lear-jet travel and other personal luxuries.

Engel's company, also known as PMSI, maintains and rehabilitates power plants across California, including the AES generating plant in Huntington Beach.

At the time of their arrests, Dick Engel had two Bentley automobiles and a Cadillac; Jolene Engel had two Mercedes, a Ferrari and a vintage Plymouth.

When investigators arrested Nick Jesson at his favorite doughnut shop, they said they found a copy of "The Fear Factor," a book on IRS prosecution of tax evaders.

Prosecutors displayed a March 2001 advertisement in USA Today in which Jesson and four other business owners, one from California, claimed they had stopped withholding taxes from their employees' paychecks because the government had no authority to collect the money.

The ad, sponsored by We the People Foundation, misled people about the law, prosecutors said; the employers, including Jesson's No Time Delay Electronics Inc., also exposed their employees to penalties and back taxes by claiming the money wasn't owed to the government.

"This organization encouraged people to 'un-tax' themselves," tax board spokeswoman Denise Azimi said.

The Jessons filed joint income tax returns showing no income and no taxes due, she said, a tactic used by other tax protesters.

No Time Delay Electronics Inc., a worldwide provider of electronic components, had gross receipts of $5.2 million in 1999, according to the last corporate return Jesson filed.

In 2001, Jesson's business was raided as part of a federal tax-fraud probe. A government complaint alleged that Jesson, who was not sued, used fraudulent advice from a tax advisor to obtain a $215,454 tax refund for his company.

Jesson was a Republican candidate for governor in the March 2002 primary, receiving less than 1% of the vote. He later ran as a write-in candidate.

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