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Neways is a profitable business and has made a lot of money for its founders. It's too bad for the PR department just who its founders are. And those founders liked their money, or at least didn't like to pay taxes on it. In 2005 Thomas E. Mower, his now ex-wife, Leslie DeeAnn Mower, and their attorney, James Thompson, were convicted in federal court on tax evasion and tax fraud charges.
Yesterday, the 10th Circuit upheld their convictions, sentencing and in general deciding completely against them.
So what did the Mowers and Thompson do? Well, it seems they forgot to tell anyone, including the IRS, that they'd been receiving money from their overseas subsidiaries as personal income. This wasn't chump change, either — over $4 million was concealed.
It's a complex tale of multiple shell accounts. The court expressed amazement at the sheer number of shell accounts, shifting corporate entities, and other items. And the Mowers and Thompson were pretty brazen too. When the IRS investigating agent started asking about whether payments from the overseas companies were personal income, the Mowers, with Thompson's help, drafted false load documents that were backdated.
The Mowers were sentenced to almost three years in jail, and Thompson was sentenced to about a year.
This is yet another lesson demonstrating why you should just pay your taxes. Indeed, the IRS was involved with another recent, prominent fall from grace: that of Governor Eliot Spitzer, whom the IRS investigated at first in his recent prostitution-related scandal.
The good news for Neways? In 2006 the Mowers sold the company to new owners, who hopefully have learned some lessons from the Mowers' mistakes.
For corporate attorneys Thompson's tale is a cautionary one. Don't be too eager to help the owner of the company do something shady. Thompson would have done well to follow this advice. Instead, he's in jail and lost his law license — and he didn't see any of those millions in income.
