Charles Loewen, the owner of Paradise Stone & Tile in Lahaina, pleaded guilty Thursday to conspiring to defraud the United States and filing a false tax refund claim.
Loewen, 57, entered the plea in U.S. District Court in Honolulu after he was indicted in connection with a scheme in which he and his wife falsely claimed tax refunds totaling nearly $2.4 million from the Internal Revenue Service, according to Hawaii U.S. Attorney Florence Nakakuni.
Loewen created fake supporting tax documentation, including phony 1099-OID forms, to make it appear the IRS owed him a large tax refund when it didn't, according to the indictment.
According to information produced in court, Loewen further conspired to conceal his Paradise Stone & Tile business income from the IRS. After the state Department of Taxation levied two of Loewen's Territorial Savings Bank accounts, he closed the accounts. Loewen's wife opened an Arizona bank account, and Loewen began depositing his Paradise Stone & Tile business income into the Arizona account.
Loewen later submitted false federal tax returns to the IRS claiming that he had zero net income for three tax years, when in fact he had earned net income for those years, according to a news release from the U.S. attorney's office.
Loewen is facing up to five years in prison on each charge when he is sentenced July 3.
The case was investigated by the Internal Revenue Service - Criminal Investigation.