Former Owners of HB Business May Go to Prison for Not Paying Restitution in Tax Evasion Case

A divorced couple may face prison time today if they have not coughed up court-ordered restitution as part of a plea agreement in a tax evasion case involving their Huntington Beach power plant refurbishing business.

Jolene Engel has paid hundreds of thousands of dollars she owed as part of her plea agreement and she was much closer to reaching her goal, according to Deputy District Attorney Bill Overtoom.

Her ex-husband, Richard Engel of Newport Beach, paid $120,000 last October, but owed hundreds of thousands of dollars more and does not appear to be able to pay full restitution, meaning he faces prison time, Overtoom said.

The defendants pleaded guilty Dec. 16, 2011, to tax evasion involving more than $180 million in unreported gross revenue from Powerplant Maintenance Specialists Inc.

Jolene Engel was the company’s president until June 30, 2001, when Richard Engel took that position.

Under the terms of the guilty plea, the two were given the option of paying the back taxes before sentencing.

By January of this year, Jolene Engel was paid up on her personal tax liability, but still owed more in corporate taxes, Overtoom said.

Richard Engel said in a letter to the judge last fall that he had to borrow the money from a friend.

Richard Engel has blamed his money woes on a news release from the District Attorney’s Office that was issued when the Engels pleaded guilty in December 2011.

Richard Engel said he lost a $400 million project because of the publicity about his conviction. The project would have led to a $1.8 million profit, so Engel said he agreed to the plea bargain because that money would have allowed him to repay what he owed.

“My state of mind when signing and agreeing to the terms was that I couldn’t wait to bring the money to the court and satisfy my debt to the state of California,” he said in the letter to the judge. “The D.A. has made it impossible for me to perform based on its malicious, inaccurate press release.”

Richard Engel could face up to 12 years and eight months in prison and Jolene Engel faces up to five years and eight months in prison, Overtoom said.

Bankruptcy protection was sought for the company in 2002.

Richard Engel pleaded guilty to four felony counts of failing to file tax returns for the corporation, three felony counts of filing false personal tax returns and a felony count of failing to file a personal return.

Jolene Engel pleaded guilty to one felony count of failure to file tax returns for her corporation and a felony count of failing to provide material information in a tax return.

The company had contracted to refurbish a Huntington Beach power plant in October 2000 for about $108 million, a project projected to take three months.

--City News Service

PHOTO Patch file photo.