A federal judge sentenced second-generation car dealer Alan Pflueger to 15 months in prison Friday for failing to report as income hundreds of thousands of dollars in personal expenses he paid with company money.
U.S. District Judge Leslie E. Kobayashi gave Pflueger until Dec. 6 to turn himself in to begin serving his sentence. She also fined him $40,000 and ordered him to perform 200 hours of community service related to prisons or offenders.
Pflueger, 46, apologized and said he takes full responsibility for his actions. He said he has paid all personal income and corporate taxes that were not paid because of his actions and deposited with the Internal Revenue Service an additional $500,000 in case more taxes are owed.
He pleaded guilty last year to a single charge of lying on his 2005 income tax return. However, as part of his plea agreement, Pflueger, whose full name is Charles Alan Pflueger, admitted that he filed false tax returns for 2003, 2004 and 2005. He reported his income was $198,213 in 2003, $241,114 in 2004 and $695,724 in 2005.
For the purpose of calculating Pflueger’s sentence, Kobayashi found that Pflueger’s car dealerships paid out $355,608 to cover Pflueger’s personal expenses in 2003, $640,484 in 2004 and $654,878 in 2005.
Pflueger admitted to signing 86 percent of the checks issued by his car dealerships to cover his personal expenses. Other company officers signed the rest. The checks covered, among other expenses, Pflueger’s credit card and home utility bills, and landscaping and maintenance on his personal residences.
Government lawyers asked Kobayashi to give Pflueger partial credit at sentencing for his assistance in the prosecution of his co-defendants, company Chief Financial Officer Randall Ken Kurata, Pflueger’s executive assistant Julie Ann Kam and Los Angeles certified public accountant Dennis Lawrence Duban. All three have also pleaded guilty and are awaiting sentencing.
Federal prosecutor Dennis R. Kihm said Pflueger does not deserve full credit because he was not willing to cooperate in the trial of his father, James H. Pflueger.
Alan Pflueger’s lawyer William McCorriston disagreed. He said the younger Pflueger was willing to answer truthfully any question posed to him.
Kobayashi said she doesn’t fault anyone for not wanting to testify against his or her father.
She found James Pflueger not guilty following a nonjury trial earlier this year of tax fraud and related conspiracy charges for allegedly lying about his income on his tax returns. The younger Pflueger did not testify in the trial.
Kobayashi noted that Alan Pflueger’s guilty plea came at great expense to his personal relationships with longtime Pflueger employees Kam and Kurata, who were prosecuted for actions they did at Pflueger’s direction. After their indictment, Pflueger entered into a joint defense agreement with his co-defendants, then turned on them when he pleaded guilty, Kobayashi said.
Kihm said the government was forced to indict Kam and Kurata because they refused to cooperate during the investigation.
Kobayashi attributed their refusal to their loyalty to the Pfluegers.
Prosecutor Les Osborne said Pflueger also put at risk of criminal conduct the nanny to his children when he promised to take care of her taxes. And he said Pflueger took money out of the pockets of his managers and longtime associates because their compensation is based on the dealerships’ profitability.
Kurata pleaded guilty to filing a false corporate tax return for deducting as business expenses the money that was used to pay Pflueger’s personal bills.
