Updated: August 23, 2021 Date: August 12, 2021 Contact: newsroom@ci.irs.gov Madison, WI — Timothy M. O'Shea, Acting United States Attorney for the Western District of Wisconsin, announced that James Donker of Eagle River, Wisconsin, was sentenced today by Chief U.S. District Judge James D. Peterson to 14 months in federal prison and fined $25,000 for conspiracy to the defraud the Internal Revenue Service. Donker pleaded guilty to this charge on June 4, 2021. Donker is the sixth defendant to be charged and convicted of tax crimes relating to a federal tax investigation into video gambling machine (VGM) vendors and bar owners who skimmed VGM cash receipts and failed to pay federal and state income taxes, as well as state sales taxes, on the gambling revenues. The other defendants include: Defendant Charge Tax Loss Prison Sentence Imposed Fine Imposed Restitution Ordered to IRS and WI Dept. of Revenue Cherie Hellenbrand Filing False Tax Return $268,852 6 months $350,191 Dudley Hellenbrand Filing False Tax Return $268,852 6 months $350,191 Tom Laugen Tax Evasion $580,220 1 year and 1 day $548,416 Mary Lavine Filing False Tax Return & Conspiracy to Defraud the IRS $3,028,930 1 year and 1 day $75,000 $2,762,622 Colin Albany Conspiracy to Defraud the IRS $146,337 1 year of probation $146,337 This investigation began when an IRS Criminal Investigation Special Agent working undercover posed as a buyer for Middleton Sports Bowl (MSB), which had been listed for sale by the owners, Dudley and Cherie Hellenbrand in late 2017. The undercover agent met with the Hellenbrands, Tom Laugen, and Colin Albany at MSB on May 31, 2018. At that meeting, the Hellenbrands admitted to the agent that they skimmed the cash receipts from the VGMs and did not report the skim on their tax returns. They told the agent they stored the skimmed VGM cash receipts at a safe in their home and used the cash to pay for various things, including a car, spending money for vacation, $40,000 in landscaping, and cash wages to some of their employees. Laugen told the agent that his company, Global Vending, prepared false collection tickets and false machine generated tickets that underreported the true gross receipts and profits generated from the VGMs. Laugen stated, "you got to steal in this business or you ain't going to make any money." Laugen later admitted to investigators that Donker supplied the false machine generated tickets. Albany told the agent that his company, Bullseye, would report whatever VGM income number the bar owner wanted them to report. Bullseye's owner, Mary Lavine, later told the Hellenbrands she would underreport the VGM cash receipts by whatever number the Hellenbrands desired. Search warrants executed at MSB and at the homes of Laugen and the Hellenbrands resulted in the seizure of ledgers and business records showing the evasion of federal and state taxes on VGM cash receipts going back to 2010. All six defendants pleaded guilty and four of the six—but not Donker—agreed to cooperate with the government in enforcing tax compliance with their bar customers who operated VGMs. At today's sentencing, Judge Peterson explained that Donker's sentence was 2 months more than Laugen's, his colleague at Global Vending, because Donker destroyed his business records after being served with a federal grand jury subpoena demanding the production of the records. Judge Peterson emphasized that Donker committed a serious crime that involved a significant tax loss. As a result, Donker needed a sentence that was punitive and would send a message to the business community that "if they evade taxes this is the price they will pay. There is a cost to it and the cost is a prison term." Judge Peterson ordered Donker to report to prison on September 17, 2021. The judge also ordered Donker to pay total restitution of $540,619, which consists of $224,733 to the IRS, $42,411 to the Wisconsin Department of Revenue for Donker's state income taxes, and $273,475 to the Wisconsin Department of Revenue for the state sales taxes due and owing by Global Vending. Judge Peterson noted that Donker's restitution order may be moot because Donker paid $540,619 last month to settle these tax debts. The case against these six defendants is the result of an investigation by IRS Criminal Investigation and the Wisconsin Department of Revenue, Office of Criminal Investigation. The prosecution of this case was handled by Assistant U.S. Attorneys Daniel Graber and Chadwick Elgersma.
