Haas in hot water!

Holy smokes! Have you guys read the Wall Street Journal, NY Times, or been on the net? Gene Haas has been arrested for tax evasion!

jhearons broke the news here in the CNC forum a little earlier. Held without bail...serious.


From NY Times
June 20, 2006
Executive Accused of Tax Fraud and Witness Intimidation
By DAVID CAY JOHNSTON
The owner of the nation's largest computerized machine tool maker was arrested yesterday morning at his California home and charged with orchestrating a tax fraud that cost the government nearly $20 million as well as intimidating witnesses and a federal agent investigating the case.

Gene F. Haas, 54, of Camarillo, Calif., the owner of Haas Automation and other companies, was accused in a 52-page indictment of running a bogus invoicing scheme to create fake tax deductions. Mr. Haas was held without bail after his arraignment in Federal District Court in Los Angeles.

In court papers asking that Mr. Haas be held until his trial, the Justice Department said that he could flee the country in his Cessna jet and head for China, where he has business interests. The Justice Department said China did not have a treaty allowing extradition of accused tax cheats. It called him a flight risk, saying he has few ties to the community, is single, has no children and faces about 20 years in prison if convicted.

Haas Automation, in a statement, said that Mr. Haas was not guilty and that the tax issues "revolve around" the company's former chief financial officer, John Phillips. It said the indictment would have no effect on the business.

Last month, Haas Automation won, by default, a lawsuit filed in Ventura County Superior Court accusing Mr. Phillips of cheating the company out of $27.5 million.

The transactions described in that lawsuit are among those listed in the federal indictment, Peter Zierhut, the company spokesman, confirmed.

Mr. Phillips, identified only by his initials in the indictment, went to the F.B.I. in April 2001 and told them that he had been ordered by Mr. Haas eight months earlier to cheat the government out of more than $8.9 million in taxes, the Justice Department said. Mr. Phillips is an unindicted co-conspirator.

The indictment identified Charles W. Todd of Minden, Nev., as the owner of a nonexistent company, Supermill, doing business as American Putter, that was paid $12 million for sham purchase orders and then funneled 98 percent of that back to Mr. Haas. Mr. Todd appeared in Federal District Court in Los Angeles yesterday and agreed to plead guilty to two tax evasion charges, the Justice Department said.

Another man, Kenneth Greene of Simi Valley, Calif., also agreed yesterday to plead guilty over his role in aiding the tax fraud.

Denis A. Dupuis, 51, of Newbury Park, Calif., a former general manager of Haas Automation, and Robert G. Cable, 73, of La Crescenta, Calif., a former salesman for the firm, were indicted, accused of helping fabricate the tax deductions. They were paid about 2 percent of the $23 million in face value of the sham invoices, the indictment said.

The other 98 percent of the money was funneled back to Mr. Haas, according to the indictment. It said Mr. Haas cheated the government out of $12.5 million on his personal tax returns and $7.7 million on Haas Automation's returns in 2000 and 2001.

The indictment also described two other invoicing schemes. One involved a Nascar race team sponsored by Haas Automotive and the other a land title company. The indictment gave few details other than stating that all the money paid in those two schemes was funneled back to Mr. Haas, suggesting that he may have operated them without confederates.

"The tax fraud schemes in this case stem from defendant Haas's dislike of the federal judicial system and anger towards a federal judge (Judge Leonie M. Brinkema) who presided over a patent infringement suit" that Mr. Haas lost in August 2000, according to the court papers. The indictment said that the primary purpose of the "tax fraud schemes was to recoup the patent infringement settlement payment by defrauding" the government.

The Justice Department said that when Mr. Haas learned that Mr. Phillips had gone to the F.B.I., he told him, "Don't make me hurt you." The indictment and related papers cite this as the first of a number of efforts by Mr. Haas and an unnamed private investigator to intimidate witnesses and an Internal Revenue Service special agent, with threats of financial and physical harm for themselves or their families.

The indictment said one witness, a partner with Mr. Phillips in a Kansas flower shop, told the authorities about threats by the private investigator, but she recanted them after developing a "personal relationship" with the private investigator.

Last year, President Bush cited Haas Automation's success in exporting machine tools as a reason to adopt a free trade agreement with Central American countries.

What?...Gene didnt make a big enuf campain contribution?? Oppps !!!!

Kalifornificaton. No wonder. Just let Mexico cede it back.

I read the above story with utter amazement. I am similarly amazed by the weak replies.

Assuming the story not to be libel, the episode is just plain sick.

The man was an American sheikh!, his name is known to everyone in his trade and to many in high finance and business. The man spoke with governors and presidents.

Now he sits in jail like a dangerous criminal denied bond.

What possessed the man to fall and bring shame on his name and the mighty business that he built as if he was a character in a Greek tragedy?

Hubris? He has to score as high as any who ever possessed it.

Vengence? The fire in his belly will now consume him.

The man is seven years younger than I am, he will not see freedom for a decade or more now.

The man had it made. and he has just scrapped the rest of his life and those of his henchmen, willing or unwilling.

You play you pay, as I send my tax check in the mail.If I tryed to cheat the tax man to the extent (ratio wise) that he allegedly did they would have my ass in a sling big time. No tears from me.

This is going to have serious implications all across this industry. It is probably going to reek havoc on the stock market by the time is is all over.

This is the kind of thing that makes you wonder. Just how much money is enough money?

Sad

This is a perfect reason to throw the IRS out and put in Fair Tax. There is no games you can play, you buy something new and you pay the tax on it no more business taxes.

http://www.fairtax.org/

HE was free to leave the US and take his buisness of junk machine tools wit hhim...instead he decided to stay and play....too bad, you lose...off to jail with him...

Larry:

Why is it going to have serious implications all across this industry?

The company will lose Mr. Haas's daily leadership but it will go on. Haas Automation, Inc, is not on trial nor has the company been accused of anything.

You are so right in your question. Just hwo much is enough? Answer that and you will blaze a new trail in the human experience.

I hope that the company shareholders and the regular staff won't be effected by this.

Donovan:

If and when the laws are changed is the time and reason to throw out the IRS. Our Man, Mr. Gene Haas heads a machine tool company, he is not a legislator.

It appears that Haas Automation was doing all right despite whatever taxes they were paying. The motivation for ducking the tax was something other than the tax burden on the business.

They refused bail because of the witness tampering part of the indictment. Judges take a very dim view of that

Leigh:

Not to mention the Cessna corporate jet that was spooling up on the runway.

Notice that China doesn't extradite Americans accused of cheating on taxes.

Like I've been saying.... they shoot first and ask questions later... and then people wonder why businesses are running for Mexico and China.

Ain't just about "cheap labor". Also about Class Warfare as a public policy slant.

Gene

The guy is a crook who felt he was above the law (first with the patent infringement claim) and second with his idea of retribution, third, witness tampering (threatening) . . . pretty full of himself by the sounds of things. Lost perspective on what was really important somewhere along the way.

I look forward to the day when I have a $20 million dollar tax bill . . . that would mean that I should have at least $20 million to continue to grow my company after the tax man gets his due. . . I think by the time you make that kind of money that the tax brackets are close to 40%?

Not to mention the Cessna corporate jet that was spooling up on the runway.

Click to expand...

But Jim...

That was just a pilot familiarization flight, with Haas as instructor

Leigh

The tax charges may hold up, but the witness tampering portions of it seem really, really REALLY thin. If I had $1 for every time I'd wished ill upon someone, I'd have less money than Gene Haas, but more than I have now. That's not witness tampering...

Leigh:

ROFLMAO!

Comatose:

The threatening charges may not stick but the mere mention of them hurts Mr. Haas' case deeply.

So to does the mention of the possibility of his flight from prosecution.

His strategy wants to be that he is just a working man who made a mistake.

The prosecution wants to make him out as a Mafioso.

So far they are treating Haas as if he was a gangster. The charges and methods are the same as they use against the wise guys up in Noo Yawk.

"Hey, you gotta nice fattory here. I better see a lot of my machines in here if youse wanna stay healthy."

When they make the movie of this Al Pachino will play the lead. The flick will out gross "The DaVinci Code" on the first week end.

JimmyK Brokerage rates Haas Automation stock as a Buy!

I just looked at my latest CNC Machining magazine, which I received yesterday,then I logged on to see this news!! The story titled "Up a creek without a paddle" may need a rewrite . Also today is Haas Demo Day, I didn't realize they would be demonstrating CEO stupidity Martin

In the Genral forum a post linked to an article that explained the patent suit. I didn't want to sign in with them so I wasn't allowed to read further than their first page.

It seems that the dispute was over an interactive programming technology and an IP licensing issue.

I thought such things were covered by copyright instead of patent. Is the Hurco system a piece of computer hardware or it all software?

From what I have heard for quite a while, Hurco plays it's hardware and software very close to it's chest. I think that Hurco would be the wrong outfit to mess with when it comes to controls or operating software.

The part of the article that I read mentions some kind of offer by Hurco to license the technology to Haas. Why in the world would a large company like Haas decide to grab the technology and go?

Why in the world would a large company like Haas decide to grab the technology and go?

Click to expand...

Do you mean "grab" as in "the thief grabed her purse"

Do you mean "go" as in catch me if you can?

Or do you mean pay for it and go on with biz?