Judgment day for multimillionaire Bellevue fraud
SEATTLE -- Looking at spending his last days in a federal prison for an audacious tax cheat, multimillionaire Bellevue developer Winston Bontrager couldn't quite come clean.
Convicted following a jury trial, Bontrager, 64, and his girlfriend were sentenced Friday to years in federal prison for failing to tell the IRS about millions of dollars in income from a series of Southwest Washington land deals.
In the decade before his March 2012 arrest, Bontrager hid $23 million in income from the IRS and paid less than $55,000 in taxes. He also failed to repay more than $687,000 in restitution outstanding from a 1994 tax fraud conviction, the second of three federal fraud convictions he garnered in a lifetime of crime.
Facing a prosecutor's request that Bontrager be sentenced to 15 years in prison, U.S. District Court Judge Richard Jones instead ordered he serve an 11-year term. Bontrager and girlfriend Pauline Anderson, who was sentenced to a three years in prison, were ordered to repay $2.7 million in taxes at Friday's sentencing hearing.
Describing Bontrager as "unique" in terms of the size and staying power of his 14-year tax dodge, Assistant U.S. Attorney Carl Blackstone said the three-time convicted cheat was a lot like other frauds in one respect - he thought he could talk his way out of prison.
"They're used to defrauding people," said Blackstone, who concluded his 23 year career at the Seattle U.S. Attorney's Office Friday with Anderson and Bontrager's sentencing. "They think they have the gift of gab."
Only time will tell whether the prison term amounts to a life sentence for Bontrager, who refused to admit his guilt in the face of overwhelming evidence of fraud. Bontrager, who lost his prostate to cancer in recent years, asked Jones for a five-year term.
Asserting Bontrager wanted to live the "lifestyle of the rich and famous," Jones noted Bontrager at could've easily paid his debts and avoided the mess entirely were it not for his greed.
"You're a one-man wrecking ball in the lives of other people," Jones told Bontrager from the bench. "The clear standout motivation for all of your conduct was plain old-fashioned greed."
30 years of fraud
Bontrager and girlfriend-turned-business partner Anderson were convicted on multiple fraud counts in July following a jury trial. Neither has come clean since - Anderson continues to deny the crimes of which she was convicted, while Bontrager had only made vague admissions of regret prior to Friday's sentencing hearing.
The jury was told Bontrager and Anderson lived lavishly while dodging the IRS, even when he could easily have paid his taxes and past tax debts.
Having spent millions of dollars on cars, property, jewelry and plastic surgery, Bontrager and Anderson hid millions more from the IRS. At least $10 million was sent to Australia in an effort to put it beyond the government's reach.
An Australian national, Anderson, now 65, came to the United States while in her 20s. When she met Bontrager, she was working as a hairdresser; she'll almost certainly be deported after serving her sentence.
First caught in a scam at age 34, Bontrager has spent much of the past 30 years involved in one fraud or another, or locked up.
Bontrager was convicted of bank fraud in 1983 and sentenced to probation. He returned to crime four years later, when he began a scheme that defrauded both the Oregon public pension system and the IRS.
In that episode, as with the more recent schemes, Bontrager passed checks to his then-girlfriend, who deposited them in her own accounts, allowing Bontrager to hide the fruits of his fraud. She then spent at his behest, while Bontrager bought luxury cars with company money.
Convicted in 1994, Bontrager, then in his mid-40s, was sentenced to 3 1/2 years in federal prison and ordered to pay $687,000 to the IRS and his victims. He served just less than two years; while locked up, though, Bontrager met another fraud, a Vancouver man who would unwittingly help Bontrager continue his low-speed crime spree.
Released in April 1997, Bontrager claimed poverty even after arriving at a meeting with his probation officer in a Jaguar. Lying, he said the car belonged to his mother.
More troublingly, for investigators and, now, for Bontrager, he wouldn't come clean about his business interests and the fortune he was building though a run of dirty land deals in Southwest Washington.
Rather than make amends for his past transgressions - an easy deed for a multimillionaire - Bontrager hid millions with Anderson's help and presented himself, at least to the government, as a destitute ex-con unable to pay his debts. Owing the $687,000, Bontrager repaid little more than $4,200 prior to his arrest.
"He's a serial fraudster who used a fountain pen instead of a gun," Blackstone said Friday.
"He will defraud people as long as he lives," the prosecutor continued.
Anderson met Bontrager shortly after he left prison. As it happened, the pair met at the Fish Cafe, a Kirkland bar, since closed, where Bontrager found the last woman he brought into a fraud.
In a scheme that would see his son and daughter-in-law face federal charges as well, Bontrager had his son register a business for him, Alexandria Investment Co., days before he was released. While his son was initially the sole shareholder, Bontrager ran the company and lived off its largess.
Broke, Bontrager turned to the Vancouver man he met in prison. As it happened, the man's brother ran a successful billboard leasing company; Bontrager made him an investor, taking $3.5 million in loans meant to fund two Clark County developments.
Court proceedings indicate Bontrager could have done right by his investor, whose money allowed him to buy - through a cutout, to hide the profit from federal authorities - 24 acres of vacant land in 2001.
Bontrager double-crosses investor
At the time, the land was eyed by Costco, which hoped to build a warehouse on the Vancouver site. Buying the land for $2.6 million, Bontrager was slated to sell it for $6.6 million until Clark County authorities declined to permit the development due to traffic concerns.
The Costco deal dead, Bontrager struck a secret agreement with Legacy Health Systems that saw the Portland-based health services company buy the land and build a hospital on it. Before Legacy did so, though, Bontrager cut his investor out.
Bontrager convinced the man that, with Costco out of the picture, the best he could do was limit his losses by allowing Bontrager to sell the property to a New York developer. In truth, the "developer" was another Bontrager cutout.
The investor, at Bontrager's urging, accepted a $1.3 million payment and a promise to assume the debts associated with the property. Bontrager, having already inked a deal with Legacy, sold the land for $9.7 million and pocketed about $4 million.
Bontrager and his son Jason - at the time a 50 percent owner in the development company - should have reported about $2.9 million each in income to the IRS that year and paid about $800,000 in income taxes, Blackstone said in court papers. Rather than do so, Bontrager lied to his accountant, hid the income and claimed their company actually lost money that year.
In the end, no income taxes were paid on the property sale that made both men millions. Bontrager paid $3,400 in income taxes that year, claiming he'd earned just $30,000.
Having admitted to his role in the scheme through a plea agreement, Jason Bontrager is scheduled to be sentenced in January. A former functionary in the state Republican Party, Jason Bontrager pleaded guilty through a sealed plea agreement ; though he was not called to testify at trial, his father didn't bother asking for leinency for his son or appologizing for soiling his reputation with the mess he masterminded.
While working through that scheme, Bontrager bought another 40-acre parcel in the Hazel Dell area of Clark County, just north of Vancouver, and set to work rezoning it for development. Initially rebuffed by the county, Bontrager ultimately won his rezone on Hazel Dell Town Center and sold the property in June 2003 for $14 million.
Again, Bontrager cheated the IRS, that time by inflating his business expenses. A multi-millionaire six years out of prison, he hadn't bothered to pay even 1 percent of his court-ordered restitution.
Fugitive developer linked to projects
In a third Clark County development, Bontrager conspired with Michael Mastro, the Medina developer currently hiding out in France to avoid a federal fraud indictment.
Mastro, 88, and his 63-year-old wife Linda fled the country in 2011 to avoid creditors and federal prosecutors. The Mastros are accused of secreting away millions of dollars from their creditors; the French government has refused to extradite the couple.
Mastro, a developer and private money lender, did about $2 billion in business during the past four decades. The real estate business made him a very wealthy man - he and his wife abandoned a $15 million home in Medina after the real estate market collapsed.
By the end, the Mastros owed creditors about $586 million and had - or, more exactly, admitted to having - about $249 million in assets.
After 15 months on the run, the couple was arrested last October in France on a warrant. But the French decision not to extradite the couple has left U.S. prosecutors stymied.
In July 2004, Bontrager and Anderson bought 47 acres in Vancouver and set about turning it into a shopping center. Mastro guaranteed the $7.7 million loan to buy the property; still officially claiming poverty, Bontrager told bankers he had $36.4 million in assets at the time, including $5.1 million in cash.
Bontrager resold the half the property to Walmart for $9.7 million. Mastro then set about developing the other portion of the parcel; he ultimately bought the land for $14.3 million in September 2005.
As he had previously, Bontrager hid his income from the sale to avoid paying taxes on the $2.9 million or so he made on it. Doing so, he dodged nearly $1 million in taxes in 2005; he paid just $2,361 in income taxes that year.
Luxury cars, fine wines bought
Having snuck at least $10 million out of the country to an Australian account in Anderson's name, Bontrager and Anderson lived in luxury.
They bought a condo in Bellevue's Meydenbauer Square for $740,000, then spent $500,000 on a garish remodel. The couple rang up $3.4 million in credit card charges from 2001 to 2009, stocked a cellar with $325,000 in wine and bought a $1.2 million vacation home in La Quinta, Calif. By the time federal agents came calling, the couple had something of a car collection - a Rolls Royce, a Bentley and a Cadillac Escalade.
To hide his wealth, Bontrager rented a modest apartment and told the Department of Justice he was living there, and that Anderson was nothing more than a landlord.
Writing the court, Blackstone described Anderson as a critical player in the fraud. Her accounts in the U.S. and Australia enabled Bontrager to hide their money, and her good name allowed him to hide their assets.
Anderson also should have known better - after all, her beau was a twice-convicted tax fraud who owed the government hundreds of thousands of dollars. Blackstone noted a copy of Bontrager's restitution order was found tucked inside a Barcelo bag, along with Anderson's tax returns.
Indicted in March 2012, Anderson and Bontrager took their case to a federal jury. They were convicted of all counts in July.
At trial, Bontrager took the stand in his own defense. Lying even then, Bontrager denied having overseas bank accounts, said neither he nor Anderson owned any real estate and claimed he always meant to pay restitution.
'A hard pill'
Describing a prison term as something that has "happened" to him, Bontrager called it a "hard pill to swallow" while describing himself as a hardworking, self-made man.
"I am scared," Bontrager said in a letter to the judge. "I ask you to be understanding of me and my life, and I ask you, please, be merciful to Pauline."
Addressing the court Friday, he attempted to protect Anderson and gallantly asked for leniency on her behalf. He refused to admit any wrongdoing, and alluded to an appeal he's certain to pursue.
Without admitting his crimes or taking blame for his girlfriend's situation, Bontrager said Anderson was "caught up in something she didn't understand."
Blackstone noted that, like her boyfriend, Anderson still has not admitted to any wrongdoing. That "defiance," he said in court papers, made leniency difficult.
"Her complete refusal to accept any responsibility for her criminal conduct speaks volumes about her character," the prosecutor said in court papers.
For her part, Anderson asked that she be sentenced to time served and released following Friday's hearing. She, like her former beau, adamantly denied any wrongdoing, shaking her head as the prosecutor outlined her crimes.
"I had no part in this. None," Anderson said said, her Australian accent muted by decades in the United States.
"I'll swear on a million Bibles," she tearfully told Judge Jones. "I'll swear on my mother's grave."
Jones agreed Bontrager was the driving force behind the scam and that Anderson would likely have continued living honestly if not for her felon boyfriend. But, Jones said, Anderson surely should have realized at some point in the 14-year tax dodge that Bontrager - whom she knew previously served prison time for tax fraud - was up to something moving millions through her accounts and putting land in her name.
"At some point and time a light had to come on that things weren't being done properly and that things were being done wrong," Jones told Anderson.
"That (ignorance) may have been blind love for Mr. Bontrager, but you have to face the consequences," Jones added.
Bontrager and Anderson have been jailed since June 2012. Both will now be transfered to Bureau of Prisons facilities; Anderson will be transfered to immigration authorities upon her release.