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Newport Beach Man Gets 7 Years In Prison For Not Paying Taxes On $180M

SANTA ANA (CBSLA.com) — A Newport Beach man was sentenced Friday to seven years in state prison for failing to pay taxes on more than $180 million in unreported income from the power plant refurbishing business he shared with his wife.

Richard Engel, 70, pleaded guilty Dec. 16, 2011 to three felony counts of filing false personal tax returns and five felony counts of failing to file tax returns for himself and his company. Engel also admitted to sentencing enhancements for fraud in excess of $500,000, causing a loss in excess of $1 million, officials from the Orange County District Attorney's Office said.

Engel's ex-wife, 63-year-old Jolene Engel, was sentenced to three years of informal probation and will also be ordered to pay restitution.

In 2000, prosecutors say Richard Engle filed forms claiming no income for 1998 and 1999 and in March 2001, reported only $144,231 in income. Jolene Engel failed to file personal income tax returns for 1998 through 2000, prosecutors said.

The Engels owned and operated Powerplant Maintenance Specialists, Inc. in 1998, which specialized in the refurbishment of power facilities. In October 2008, prosecutors say the company contracted with AES Corporation (formerly Southern California Edison) to refurbish its Huntington Beach power plant for about $108 million.

Prosecutors say the Engels received more than $36 million from AES for the power plant refurbishment, for which their company did virtually no work. Instead, the Engels diverted $24 million to their own accounts to spend on jewelry, cars, a down payment on a Learjet for Richard Engel, more than $1 million to Richard Engel's other companies and more than $8.5 million to Jolene Engel for her stock in the company when the couple divorced.

Because the Engels took the money for their own purposes, their company had insufficient funds to complete the project, forcing AES to pay another $35 million. The Engels' company never completed the project and left workers, subcontractors and creditors unpaid.

The Engels also received more than $72 million on behalf of their company's work in other states outside of California between 1998 and 2001.

A labor union tipped off the Orange County district Attorney's Office about possible fraud in late 2001 related to the unpaid workers on the AES project.

Officials say that the couple was ordered to pay the California Franchise Tax Board about $1.2 million before they were sentenced. Since their conviction, Jolene Engel has repaid about $1 million. Richard Engel has repaid about $350,000, officials said.

As part of their sentences, the Engels will also be ordered to pay more restitution in an amount to be determined by the court.

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