SHARE Rob Varela / Star staff Gene Haas leaves federal court in downtown Los Angeles on Monday after his sentencing.

Oxnard businessman also paid fines

By Stephanie Hoops

Shoops@Venturacountystar.Com

LOS ANGELES — Surrounded by lawyers and his family, Gene Haas was sentenced Monday to 24 months in federal prison for conspiring to cheat the government out of millions of dollars in taxes owed by his company.

The owner of Oxnard-based Haas Automation Inc. pleaded guilty in August, taking responsibility for one of 11 federal charges brought against him.

Along with agreeing to a two-year prison sentence, Haas paid about $75 million in restitution and fines before arriving in court Monday, the judge noted, adding that Haas had to write one more check for $100 for a "special assessment" fee.

Through his lawyers Monday, Haas, 54, of Camarillo requested treatment for alcohol dependency, and the court recommended he be considered for the Federal Bureau of Prison's 500-hour drug and alcohol program.

His attorneys also requested — and the judge recommended — that Haas be placed at the Federal Correctional Institution in Lompoc, a low-security prison for male inmates near Vandenberg Air Force Base.

Assistant U.S. Attorney Sandra R. Brown pointed out that while the judge may make recommendations pertaining to Haas' sentencing, the Bureau of Prisons will decide whether to allow Haas to undergo substance abuse treatment or be placed at the Lompoc facility.

Haas left the hearing at the U.S. District Court in Los Angeles with his family and attorneys. He was ordered to return to the court and surrender himself Jan. 14. Haas remains free on $10 million bail.

Known as generous philanthropist

The conviction is a stunning blow for Haas, who has long been regarded as an extraordinary success. He founded and built his company into the country's largest machine tool builder. Haas Automation remains one of Ventura County's larger employers, with about 1,550 workers at a manufacturing complex at 2800 Sturgis Road. Haas also is known as one of Ventura County's most generous philanthropists.

Haas' plea followed a six-year investigation that also caught four of his business associates who all have pleaded guilty in connection with the tax fraud scheme. Bob Cable, Chuck Todd, Denis A. Dupuis and Kenneth Greene are to be sentenced next year.

Haas was charged in October 2005. According to his indictment, Haas enlisted the help of Dupuis, former general manager of Haas Automation, and John R. Phillips, the company's former chief financial officer, to create various tax fraud schemes to help him recoup more than $8.9 million he was ordered to pay to settle a patent infringement lawsuit filed by a rival firm. Prosecutors maintained that Haas blamed the financial loss on the federal judge who presided in the case.

After leaving the company in 2001, Phillips became a whistleblower, providing inside company information to federal authorities. Investigation records show that Phillips' successor, Greene, continued the tax fraud scheme.

Cable, owner of Enmark and Associates Inc. in Valencia, and Todd, owner of Supermill Inc. in Reno, Nev., used their companies to assist Haas and Dupuis by making bogus purchases of equipment.

98 percent kicked back to Haas

Cable and Todd kept 2 percent of the proceeds from fake equipment purchases and kicked back 98 percent to Haas through one of several subsidiaries, according to court records.

Prosecutors say the plan was to put $50 million in phony expenses on the company's books to avoid paying more than $20 million in federal income taxes — payback to the government for Haas losing the patent lawsuit.

According to company statements from Haas Automation, Haas has not been involved in the daily operations of the business for nearly a decade and operations have not been affected by the federal charges.

Haas Automation reported that 2006 was the most productive year in its history, with more than 12,500 machines produced and more than $740 million generated, nearly 30 percent more revenue than the previous year.