Kennewick Man Sentenced to Four Years in Prison for Evading Taxes on Money He Stole by Defrauding Investors
SPOKANE, WA—Michael C. Ormsby, United States Attorney for the Eastern District of Washington, announced that Michael Peter Spitzauer, age 47, of Kennewick, Washington, was sentenced today after having pled guilty to filing a false tax return and failing to file a tax return. United States District Court Judge Salvador Mendoza, Jr. sentenced Spitzauer to a four-year term of imprisonment and a one-year term of court supervision following release from federal prison. The Court also ordered Spitzauer to pay $10,365,000 in restitution to the victims of his fraud scheme, and $2,585,177 in restitution to the Internal Revenue Service.
According to court records, Spitzauer served as the CEO and President of Green Power, Inc., a biodiesel fuel business that operated at the Port of Pasco, which Spitzauer asserted possessed the technology to turn waste into biofuel. When he pled guilty, Spitzauer admitted that he defrauded various investors by representing that he would maintain their investment deposits in accounts controlled by an attorney, which deposits would not be utilized without the parties’ written agreement. In fact, Spitzauer controlled the bank accounts containing the deposits, and spent the investors’ deposits in unauthorized ways, such as on luxury goods, including a $1 million home in Kennewick, concert tickets, Seahawks and Sounders tickets, private school tuition for his children, and repaying prior investors who sought return of their funds.
Spitzauer also admitted to defrauding additional investors by falsely representing that their funds would be used to pay state agency fees or insurance bonds. As part of his scheme, Spitzauer manufactured fake communications from the state agency and the insurance companies to induce the investors to provide him funds. When Spitzauer received the investors’ funds, he spent the funds in unauthorized ways, such as personal expenditures, cash withdrawals, and unauthorized Green Power expenses.
From 2007 to 2013, Spitzauer stole more than $10.3 million from the various victims, who reside across the globe, including in China, Spain, the Netherlands, Ireland, Australia, Slovenia, Canada, Texas, and Maryland.
Spitzauer further admitted that he filed false tax returns for tax years 2007 and 2009, when he reported that he received no income and failed to disclose the funds he fraudulently obtained from his investors, which totaled approximately $4.5 million in taxable income for 2007 and 2009. Further, Spitzauer admitted that for tax year 2008, he failed to file a tax return, despite receiving approximately $3.2 million in taxable income, which represented funds he stole from the defrauded investors. As a result, Spitzauer evaded the assessment of approximately $2.5 million in taxes.
Michael C. Ormsby said, “The investing public should take notice that the cooperation among federal law enforcement agencies, including the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the U.S. Attorney’s Office, offers an assurance that investment fraud schemes will be uncovered and thoroughly investigated, and that the scammers will be prosecuted. This case is yet another example of the commitment of the United States Attorney’s Office to prosecute aggressively fraud cases in the Eastern District of Washington.”
“Mr. Spitzauer’s conduct is inexcusable” stated Teri Alexander, IRS Special Agent in Charge, Criminal Investigations. “Not only did he cheat investors out of millions of dollars, but he evaded his federal tax obligations by claiming no income from 2007 through 2009. This prosecution is a reminder that fraud will not go unchecked in the Eastern District of Washington and that Special Agents working for the IRS Criminal Investigations will continue to lend financial expertise to their federal law enforcement partners when such matters are investigated.
The investigation was conducted by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation, with assistance from the Department of Homeland Security-Homeland Security Investigations. The case was prosecuted by Mary K. Dimke and James A. Goeke, Assistant United States Attorneys for the Eastern District of Washington.