FOR IMMEDIATE RELEASE THURSDAY, OCTOBER 30, 1997

TAX (202) 616-2765 TDD (202) 514-1888

NEVADA MAN SENTENCED, FINED FOR INCOME TAX EVASION

WASHINGTON, D.C. -- A federal judge has sentenced a Nevada businessman to 110 months in prison and ordered him and his companies to pay approximately $8 million in restitution and criminal fines for income tax evasion and filing false income tax returns, the Department of Justice announced. Judge Lloyd George of U.S. District Court in Las Vegas, Nevada, imposed the sentence on Lonnie C. Christensen, 48, the owner of construction contractors, World Air Conditioning Inc., and M.J. Wood and Associates Inc., on Wednesday. Loretta C. Argrett, Assistant Attorney General for the Tax Division, and Kathryn Landreth, U.S. Attorney in Las Vegas, said Christensen was convicted in April 1997 after a three-week jury trial for conspiring to defraud the United States by failing to report income on federal tax returns, for filing false sales and use tax returns with Nevada, obstruction of justice and mail fraud. "This sentence sends a signal to all business owners that attempts to evade their responsibility to report all income and pay all taxes due will be punished appropriately," said Argrett. "The Department is committed to ensuring that all citizens pay their fair share of taxes due, and that flagrant attempts to evade this responsibility will not be tolerated." Christensen was ordered to pay restitution of $5,371,028 to the United States and Nevada and a fine of $150,000 and $135,908 for the costs of prosecution and $1,910 per month for the costs of imprisonment. Judge George ordered M.J. Wood and World Air Conditioning to pay $2.5 million in criminal fines to the United States. The jury convicted Christensen of three separate counts of obstructing justice for his theft of work papers from his

accountant's office during the Internal Revenue Service's criminal investigation, presenting a false document to the Department of Justice during a conference and making false statements and presenting false documents to the IRS. Christensen was convicted of mail fraud for using the mails to file false monthly statements with Nevada. According to evidence presented at trial, Christensen was a resident of Las Vegas and Orange County, California. He was remanded to custody by Judge George at the conclusion of a contempt hearing immediately following the sentencing. Judge George found Christensen in contempt for violating court orders to refrain from liquidating, encumbering, or dissipating personal assets. In ordering Christensen's immediate remand to custody, Judge George found a "heightened pattern of inappropriate behavior," citing as examples Christensen's diversion of hundreds of thousands of dollars from his corporations, his "gift" of a $43,000 Ford Expedition to his girlfriend immediately following the judge's order not to do this, a "sham" transaction involving the sale of a corporation with millions of dollars of receivables to his son, and the deposit of money into his girlfriend's bank account, among other examples. Evidence produced at trial showed that Christensen and his two corporations failed to report more than $6 million in income and pay almost $2 million in tax. Trial evidence also established that Christensen and his corporations failed to report to Nevada millions of dollars in out of state tax-free purchases of equipment used in Nevada. This enabled Christensen and his corporations to evade the payment of approximately $1 million to Nevada. Judge George scheduled a hearing for November 5 at 2:00 p.m. (PT) to determine the disposition of Christensen's current assets to satisfy his restitution, fines and costs. At Wednesday's hearing, the government presented evidence that these assets included a building and beach-front house in South Laguna, California. Trial evidence established that Christensen enjoyed exclusive use of the corporate jet titled in the name of World Air Conditioning Inc., with two full-time pilots. At a bail hearing following his conviction, Christensen admitted that prior to trial he sold a yacht. Evidence presented at hearings after trial proved that Christensen sold a beach-front penthouse condominium in Maui and a slope-side house in Sun Valley, Idaho. At the sentencing, other evidence presented showed that he sold a house on Espanol Drive in Las Vegas. Judge George sentenced co-defendants World Air Conditioning

Inc., and M.J. Wood and Associates Inc., to pay fines of $1.5 million and $1 million, respectively. Judge George also ordered several conditions of corporate probation, including cooperation with the IRS and periodic reports of financial condition and periodic investigations of their records by independent experts. At trial, the prosecution presented evidence to show that Christensen used diverted corporate funds to help pay for the Laguna residence, the slope-side residence in Sun Valley, and the beach-front condominium in Maui. Trial evidence established that Christensen also made hundreds of thousands of dollars of purchases of clothes and other personal items and caused them to be deducted as fraudulent business expenses. In sentencing Christensen, Judge George quoted the words of William Thackery in his novel "Vanity Fair": "Men can smile and smile and be a villain still," then said, "I'm afraid that there's a little of that in you." Judge George noted that Christensen continued to maintain that he improperly relied on his accountants, attorneys, and employees. To this he noted, "The time has come, you must admit that this is not the fault of others." The case was prosecuted by Department of Justice trial attorneys assigned to the Western Criminal Enforcement Section of the Tax Division. ##### 97-452