Unpaid Taxes Sends CEO to Prison

tax form, pen, note and calculator

The saying, “Nothing is certain except for death and taxes,” is an undisputed truth recognized by nearly everyone. If you owe money to the IRS, they may work with you on late filing or to create a payment schedule, but make no mistake, they will collect.

A Missouri man has no doubt spent time thinking about that behind bars as he serves 18 months in federal prison for taxes that went unpaid for two decades. (Seems like enough time to pay up.) Moreover, the Kansas City businessman obstructed the IRS’s attempts to collect the taxes owed – more than $378,000. In the end, Barrett Prelogar, 48, will pay the taxes, per a judge’s order. (Really, who couldn’t see that coming?)

Prelogar was a founding partner and CEO of Winntech Digital Systems, a now defunct company that produced electronic displays to be used in stores or at trade shows. Winntech was a fast-growing company with a major telecom investment that would have placed it in 18 states. That was, until Winntech’s two top executives decided to not pay the bills, including taxes.

Prelogar was convicted in 2019 of engaging in a scheme to avoid paying taxes and penalties. Winntech’s chief financial officer, Steven Matthews, was indicted on similar charges.

According to the case against him, Prelogar withheld payroll taxes from Winntech employees’ paychecks, $263,000 going back to 2002, but didn’t pay the IRS. In 2009, he owed more than $100,000 in personal taxes, and didn’t pay that either – but not because he couldn’t afford it. Over the next five years, he spent more than $362,000 buying three houses, two new cars, and a boat – all while obstructing the IRS’s efforts to collect.

Winntech filed for bankruptcy in 2012. (No surprise there.)

Today’s Fraud of the Day comes from a U.S. Justice Department press release, “Former Kansas City Business Owner Sentenced to Prison for Tax Crime,” distributed Oct. 23, 2019.

The former owner of a Kansas City, Missouri, business was sentenced today to 18 months in prison for obstructing the government’s effort to collect more than $378,000 in taxes owed, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney Timothy A. Garrison of the Western District of Missouri.

According to court documents and information provided to the court, Barrett Prelogar, 48, was a founding partner of a now-defunct company, Winntech Digital Systems Inc. (Winntech). Winntech produced electronic displays to be used in stores or at trade shows.

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Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.