Best Structuring In a Supporting Role…

With the Academy Awards being broadcast this evening, it’s appropriate to look at a case from the movies. Cindy Ondracek and her husband owned a drive-in movie theater in Port Orchard, Washington; they also owned another cinema in Bremerton, Washington. The businesses were successful: they generated over $2 million in gross revenues, most of this in cash.

But Mrs. Ondracek and her husband didn’t like the idea of the government getting the cash. So Mrs. Ondracek structured her deposits. She deliberately deposited less than $10,000 to avoid currency transaction reporting rules. That in itself is a felony.

Mrs. Ondracek, though, took this one better: She and her husband failed to file tax returns for the years in issue (2002 through 2005). And she can’t claim ignorance: Her bank sent her a warning letting her know about the currency reporting rules.

Mrs. Ondracek pleaded guilty to not paying tax on the more than $197,000 of income that came from the theaters. The government calculates the lost tax revenue at $68,000. Mrs. Ondracek is on the hook for that, and will likely get to visit ClubFed.

Here’s my helpful hint for any would be Structurers: If you bank sends you a notice warning you about currency transaction reporting, it’s time to either come clean or find a good attorney fast.

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