Hot Springs business owner pleads guilty to violating two different federal tax statutes
A Hot Springs Village business owner pleaded guilty yesterday to one count of willfully failing to pay over employment taxes and one count of failing to file a tax return.
Chief U.S. District Judge Susan O. Hickey presided over the plea hearing, in which Donald Lee Owen, 61, waived indictment by a grand jury and pleaded guilty to a criminal information charging him with violating two different federal statutes.
According to court documents, Owen owned and operated National Golf Classics, Inc. also known as All American Classics, located in Hot Springs Village. The company produced sports memorabilia for use in charity auctions and conducted charity auctions.
From 2010 through 2018, Owen’s company paid wages to employees and withheld employment taxes from those wages. These taxes included federal income tax, Social Security tax, and Medicare, also known as the "trust fund" taxes. Owen hired an accounting firm to calculate the taxes due and to prepare the IRS Forms 941, Employers Quarterly Federal Tax Return, for reporting those taxes to the IRS. However,
Owens did not actually file those forms with the IRS, as he was required to do, nor did he pay over the employment taxes due to the IRS.
From 2010 through 2018, Owen willfully failed to file Forms 941 with the IRS, and to pay the at least $818,158 in employment taxes to the IRS, despite having ample funds to do so.
Court documents also reveal that during the period when the employment taxes were due to be paid to the IRS, Owen chose to pay millions of dollars to his company’s creditors, $800 per month for a tract of real estate having nothing to do with the company and transferred $1,000 per month to a family member to pay his share on a cabin they were buying on the Buffalo River.
In addition, Owen failed to pay $430,000 of the employer portions of the employment taxes and Federal Unemployment Tax Act taxes. Owen also failed to pay $169,883 to the state of Arkansas that were withheld from his employees' wages. This negatively impacted multiple employees who did not receive credit with the Social Security Administration for wages earned and taxes withheld.
At the same time, Owen used the additional funds to support a lavish lifestyle, including purchasing and improving a luxury home in Hot Springs Village, buying 32.6 acres in Newton County, a cabin on the Buffalo River, a 2017 GMC Yukon SUV for which he paid $64,206, and a 2016 39-foot Tiffin Allegro recreational vehicle with a list price of $188,099.
When audited by the Arkansas Department of Finance on two occasions—on September 19, 2013 and on July 19, 2018—Owen falsely told the auditors he did not have regular employees, but instead used family and friends to help him during busy season.
However, when approached by employees who had not received credit with the Social Security Administration for wages earned and employment taxes withheld, Owen admitted he had not reported or paid over the employment taxes to the IRS.
Owen’s second charge relates to his willful failure to file a personal federal income tax return for the year 2018. Owen acknowledged he knew he was required to file a tax return and that he willfully failed to do so.
Additionally, Owen failed to file and pay $301,544 of his federal and $69,405 of his Arkansas state personal income taxes for the years 2008 through 2018. Finally, Owen also failed to file and his company’s federal corporate income taxes for the years 2014 through 2018.
As a result of his guilty plea, Owen may be sentenced to a maximum of six years in prison. The court will determine his sentence at a later date, after reviewing a pre-sentence investigation report prepared by the U.S. Probation Office and considering the U.S. Sentencing Guidelines and other statutory factors.
Acting U.S. Attorney David Clay Fowlkes of the Western District of Arkansas made the announcement.
The Internal Revenue Service-Criminal Investigations are investigating the case.
Assistant U.S. Attorney Steven Mohlhenrich is prosecuting the case for the United States.