Illinois businessman sentenced for $2.3 million tax fraud

March 5th, 2010 - 3:36 am ICT by BNO News  

CHICAGO, ILLINOIS (BNO NEWS) – An Illinois businessman was sentenced to federal prison for tax fraud, prosecutors said on Thursday.

Jon Darmstadter, 57, of Glencoe was sentenced Wednesday to a 60-month prison term after failing to report more than $5.3 million of income over 10 years, which is approximately $2.3 million in federal taxes between 1998 and 2007.

Darmstadter filed false federal income tax returns from 1998 through 2003, and failed to file tax returns for the years 2004 through 2007. He was an executive of the Children’s Beverage Group, Inc. (CBG), which is a publicly-traded company in Northbrook.

Darmstadter also used brokerage accounts in Canada to hold stocks and execute trades, hiding the resulting income and capital gains in foreign bank accounts in the Turks and Caicos Islands. The stock sales involved both CBG and another company he operated, Zkid Network Company, a media content company.

In addition to his prison term, Darmstadter was ordered to pay restitution to the United States for the full amount of taxes owed ( $2,365,594) minus approximately $489,000 that he had already paid. He also remains civilly liable to the Government for any and all back taxes, as well as a civil fraud penalty of 75 percent of the underpayment plus interest.

“Not only was the defendant ordered to pay more than $2 million in taxes owed as restitution, but the penalties and interest owed on back taxes can greatly compound that amount,” Alvin Patton, Special Agent-in-Charge of the Internal Revenue Service Criminal Investigation said.

“With tax preparation season upon us, we encourage all taxpayers to honor their civic duty and legal obligation to report all of their income and pay all of the taxes they owe,” he added.

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