Bialczak Brothers Plead Guilty to Tax Evasion Involving Police Towing Scandal

William Bialczak and his brother Kenneth Bialczak both pleaded guilty yesterday to two felony counts of tax evasion for their role in a towing scandal that rocked the St. Louis police department two years ago and led to the resignation of chief Joe Mokwa

The United States Attorney's Office charged that William, 62, and Kenneth, 49, engaged in skimming substantial sums of cash receipts from their businesses which were never deposited into their business bank accounts. Cash income generated by the businesses during tax years 2005 and 2006 far exceeded cash that was deposited into the business bank accounts and subsequently reported to the Internal Revenue Service as gross receipts. As part of their pleas, they admitted that between 2005 and 2006, gross receipts for their businesses were under reported by approximately $1 million dollars.

The Bialczak brothers own, operate and are equal partners in St. Louis Metropolitan Towing, L.P., Parks Auto Sales, and S & H Parking Systems, LLC, all located in St. Louis.

According to court documents, these businesses generated large amounts of cash from the operation of parking lots in downtown St. Louis, towing operations stemming largely from a contract with the St. Louis Metropolitan Police Department, and the sale of vehicles at auction and otherwise.

The Bialczaks retained a tax return preparer to prepare their business and personal income tax returns. This tax preparer, in preparing their returns, relied upon the Bialczaks' false representations that all cash receipts from their businesses were deposited into the various business bank accounts for their business entities. The tax preparer used the bank deposit figures as the gross receipts figures for these tax returns. Since the Bialczaks engaged in skimming substantial sums of cash receipts from their businesses, these monies were never deposited into their business bank accounts.

"No matter what the source of income, all income is taxable" said Toni Weirauch, Special Agent in Charge of IRS Criminal Investigation, St. Louis Field Office. "Individuals who intentionally evade paying their taxes undermine public confidence in our tax system and unfairly disadvantage businesses that play by the rules."

The two counts of tax evasion that each brother pleaded guilty to each carries a maximum penalty of five years in prison and/or fines up to $100,000, and mandatory restitution. Sentencing for both has been set for December 3, 2010.




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