Car dealer Alan Pflueger pleaded guilty to tax fraud Friday in a plea deal with the government that could have him testifying against his father, James Henry Pflueger.
The younger Pflueger, whose full name is Charles Alan Pflueger, pleaded guilty in U.S. District Court to filing a false federal income tax return for 2005 by failing to list as income money his company, Pflueger Inc., paid for his personal expenses.
The 2005 income tax return listed a total income of $695,724.
His father, James Pflueger, 85, is scheduled to stand trial in February for conspiracy, filing false income tax returns and for allegedly setting up a Swiss bank account into which he deposited $14 million from a 2007 California land sale to avoid reporting the money as income.
The younger Pflueger, 45, pleaded guilty Friday without admitting doing anything wrong.
He also agreed to cooperate in the prosecution of co-defendants, including his father, with the possibility of a reduced sentence.
"If called to testify, he’ll testify truthfully," Alan Pflueger’s lawyer William McCorriston said. "If asked about his father, he’ll answer. But no one should make any assumptions about what that testimony will be."
When U.S. District Judge Leslie E. Kobayashi asked Alan Pflueger whether he signed the tax return knowing it was false, Pflueger responded, "I take full responsibility."
He repeated the phrase in a written statement released by McCorriston. In the statement, Pflueger said he accepts responsibility for errors in the tax returns prepared by Los Angeles CPA Dennis Duban, who is scheduled to stand trial later this month and in September for conspiracy and preparing false tax returns for both Pfluegers.
The younger Pflueger also said in the written statement that he’s disappointed in himself that his filing of a false tax return occurred, and wants to use the experience to make himself a better person so he can continue to contribute in positive ways to his family, community and employees.
Randall Ken Kurata, Pflueger Inc. chief financial officer, also pleaded guilty Friday to filing a false corporate income tax return for 2003 for listing as deductions money the company paid for Pflueger’s personal expenses.
"I truly regret my actions," the 56-year-old Kurata said.
Both men face maximum three-year prison terms, $250,000 fines and mandatory restitution.
Kurata faces sentencing in December.
Pflueger’s sentencing is scheduled for January.
In exchange for their guilty pleas, the government has agreed to drop conspiracy charges against both men and charges that Pflueger filed false income tax returns for 2003 and 2004 and Kurata filed false corporate tax returns for 2004-2006.
Pflueger agreed that for sentencing purposes, the tax loss from his actions is at least $200,000, and for Kurata, at least $80,000. The government can argue for losses of between $400,000 and $1 million.
Both men also agreed to cooperate in the prosecution of their co-defendants with the possibility of reduced sentences for substantial assistance.
Pflueger’s executive assistant, Julie Ann Kam, is scheduled to stand trial later this month for conspiracy and for filing false income tax returns for 2004 and 2005 by failing to list as income money the company paid for her personal expenses.
In addition to the February conspiracy trial, James Pflueger is also scheduled to stand trial in state court for manslaughter in connection with the deaths of seven people who died when the Ka Loko Dam breached, sending 400 million gallons of water downstream on Kauai’s North Shore. Trial is scheduled for October 2013.
Pflueger owned the land that includes the Ka Loko Dam and Reservoir.
McCorriston represents the elder Pflueger in the Kauai case.
The government had sought to have McCorriston disqualified from representing the younger Pflueger in the tax fraud case due to a possible conflict of interest because McCorriston has also represented Pflueger Inc. and its subsidiaries.
U.S. Magistrate Judge Barry Kurren issued an order in April 2011 denying the government’s request to disqualify McCorriston. The government appealed, and Kobayashi affirmed Kurren’s order last December.
