Kenai dentist Glenn Lockwood, 61, was sentenced Tuesday to five years in prison along with $52,000 in fines -- a $10,000 criminal fine and $42,000 for the cost of prosecution -- after being convicted on four counts of tax evasion.
Chief United States District Court Judge John W. Sedwick, who imposed the sentence, also ordered Lockwood to serve three years of supervised release following his release from prison.
Lockwood, who owned Kenai Dental Clinic, attempted to evade more than $575,000 in federal income taxes from 2000 through 2003, according to the indictment. Evidence presented during the trial showed Lockwood used nominees, offshore bank accounts and a sham trust to cover up his interest in assets.
Lockwood funneled his money through Ireland, Nevis and the Bahamas, channeling it through shelters, according to the Department of Justice's tax division. Lockwood created a corporation for his dental practice in 2000. His corporation then leased its business to an Irish company, which paid Lockwood a small salary. The Irish company also funneled Lockwood's dental practice's income into accounts that he had control over.
He also claimed large deductions on his smaller income.
Lockwood deducted several everyday expenses from the income he did report, including clothes, groceries, utilities and gas. He also deducted a more than $1,500 charge to Mabel's House of Prostitution in Nevada as a "business expense," according to the report. He claimed purchases made at Dress Barn, David's Big and Tall Store and Big Dog Sportswear as "uniforms" for his dental practice. Lockwood also claimed "advertising expenses" to several companies and "continuing education expenses" to massage parlors.
Prior to sentencing, Judge Sedwick stressed the importance of deterring others from evading their responsibility to pay taxes.
"Tax evasion is a serious crime, which strikes at the basis on which our government operates," Sedwick said, according to a written statement from the state's U.S. Attorney's Office. Sedwick also said that some think that the only punishment for cheating on taxes is paying the money that is owed, but "far worse things can happen, like going to jail for a long time," he said.
"Getting high-income earners to pay their income taxes shouldn't be like 'pulling teeth," said Internal Revenue Service special agent Kenneth J. Hines in a written statement.
"The use of phony lease arrangements, offshore accounts and sham trusts to hide your income from taxation, particularly in a period of significant federal budget shortfalls, amounts to a financial attack on those Americans who rely on the services that income taxes provide," he said. "Our agents in Alaska, in concert with the U.S. Attorney's Office, will always be there to hold such cheaters accountable."
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