Grayslake Business Owner Sentenced to Federal Prison For Not Paying Taxes

GRAYSLAKE, IL - A 70-year-old Grayslake man who operates a manufacturing business in Wisconsin will serve nine months in federal prison for failing to pay taxes on more than $2.3 million in cash receipts, federal prosecutors said Wednesday.

Herbert C. Watts, the owner and president of Branko Perforating FWD Inc., of Bristol, Wis., failed to report cash receipts as income on his taxes from 2009 to 2014, according to a news release from the U.S. District Attorney’s Office.

During those years, Branko received more than $2.3 million in cash from the sale of scrap metal to a Cicero-based company. The scrap sales were not reported in Branko’s business records, and the cash income was concealed from accountants who prepared tax returns for Watts and the company, according to the news release.

The case is part an ongoing investigation of cash transactions in the local scrap metal industry that has resulted in several other convictions.

Watts pleaded guilty earlier this year to filing a false tax return. In addition to the nine-month prison term, U.S. District Judge John Robert Blakey on Tuesday fined Watts $10,000.

Prior to sentencing, Watts paid the taxes he owed to the federal government and the state of Illinois.

“Defendant’s conduct was little more than repetitive evasion motivated by greed,” Assistant U.S. Attorney Patrick King argued in the government’s sentencing memorandum. “Evasion feeds on itself, reducing respect for the integrity of the tax system and leading to more cheating.”