MADISON, WIS. – Scott C. Blader, United States Attorney for the Western District of Wisconsin, announced Friday, February 19, 2021, that Mary Lavine, 65, Madison, Wisconsin, pleaded guilty to conspiring to defraud the Internal Revenue Service and to filing a false 2018 corporate income tax return for her business Bullseye, Inc.
After accepting Lavine’s guilty plea, Chief U.S. District Judge James D. Peterson sentenced Lavine to 1 year and 1 day in prison, imposed a $75,000 fine, and ordered her to pay restitution of $834,769.65 to the IRS, and $1,927,852.56 to the Wisconsin Department of Revenue. He also ordered Lavine to serve a two-year term of supervised release following her prison term.
Lavine ran Bullseye with another person who is now deceased. Bullseye operated as a coin-operated music and amusement game vending business located in Madison. Lavine admitted that Bullseye also contracted with bar owners to place video gaming machines (“VGMs”) at their bars. Bullseye split the profits generated by the VGMs with the bar owners. Different bar owners had different VGM profit sharing agreements with Bullseye. Lavine admitted that she worked with certain bar owners to skim the cash receipts generated from the VGMs and not report 100% of the cash receipts to the IRS or Wisconsin Department of Revenue. This underreporting caused Bullseye to evade its own corporate income taxes, as well as the Wisconsin sales taxes and income taxes for Bullseye and its bar owners.
The government presented evidence that during the four-year time span from 2015 to 2018, Bullseye evaded $3,028,930 in federal and state taxes.
At the Februay 19 hearing, Lavine apologized for her criminal conduct and told Judge Peterson that she went along the tax evasion scheme of Bullseye’s other owner for so long because he promised to make her the majority owner of the business, but then he reneged on that promise.
Judge Peterson told Lavine that her quest to be the majority owner of Bullseye was her “drug that caused her to compromise her basic values and commit tax evasion to achieve her end goal.” The judge noted that Lavine sacrificed a lot in that pursuit, and could have left Bullseye, but did not, and now she had to take responsibility for that choice.
Judge Peterson also noted that the size of the tax evasion scheme, the large tax loss, and the long period of criminal activity, all justified a term of incarceration. According to the judge, if nothing else, “this sentence will send the message to the business community that no special rules apply to cash businesses. It’s easy to cheat and skim cash, but it is still taxable.” Judge Peterson added, “business owners need to be aware that this type of conduct will not be tolerated and will lead to incarceration.”
To date, five individuals have pleaded guilty as part of this criminal tax investigation and Lavine is the fourth to be sentenced. Dudley Hellenbrand and Cherie Hellenbrand were each sentenced to 6 months in prison, and Tom Laugen was sentenced to 1 year and 1 day in prison. Colin Albany is scheduled to be sentenced on May 6. Moreover, Judge Peterson has ordered these individuals to pay a total of $3,807,566 in restitution to the IRS and Wisconsin Department of Revenue.
The case against Lavine is the result of an ongoing investigation being conducted by IRS Criminal Investigation and the Wisconsin Department of Revenue, Office of Criminal Investigation. The prosecution of this case is being handled by Assistant U.S. Attorneys Daniel Graber and Chadwick Elgersma.