Boilermakers once targeted firm for organizing; high-rolling owners may now face prison for tax crimes
A NOTORIOUS NON-UNION contractor and his former wife pled guilty last December to tax crimes involving $180 million in income from their power plant refurbishing business. Richard and Jolene Engel will pay their dues to society when sentenced at the Santa Ana, Calif., Central Justice Center Aug. 3, 2012.
The Engels reportedly lived a lavish, high-society lifestyle in Orange County, Calif., paid for by their privately-held company, which sometimes failed to perform contracted work and bounced payroll checks.
Beginning in the early 1990s, the Boilermakers union had sought to organize construction projects run by Powerplant Services Inc. (PSI), a privately-held construction company owned by the Engels.
By the mid-1990s, IST Bill Creeden, then Assistant Director of Organizing, had assigned brothers Kyle and Gary Evenson to implement the Fight Back strategy against PSI. The goal was to place union Boilermakers on nonunion construction sites in order to conduct organizing efforts from within.
(Kyle is now Executive Director of Construction Sector Operations; Gary is AIP-Director of Construction Organizing Services.)
“PSI was kicking our tails on the West Coast,” Gary recalled. “They recruited three of our top Boilermaker hands. Kyle and I filled out applications and tested at one of their job sites in Los Angeles and were hired on, as were other Boilermakers.”
Gary quickly rose to become a foreman, general foreman, and finally superintendant. While on a PSI project in Tampa Fla., the Evensons put Fight Back into high gear. They drove the Boilermaker motor home to the job site, encouraged workers to join the union, and promoted union projects.
When PSI fired the Evensons for their organizing efforts, the union filed unfair labor practice charges, and the brothers picketed the Tampa job site. They later returned to Los Angeles to continue their Fight Back efforts. By then, the Evenson brothers stood out like neon signs that flashed “TROUBLE” for nonunion contractors, especially at PSI. Gary recalled filling a bus with about 50 well-qualified union Boilermakers and showing up at a PSI jobsite to apply for work. To the Boilermakers’ surprise, they were treated to coffee and donuts and promised jobs.
“But they didn’t hire a single one of us,” Gary recalled. “So we filed unfair labor practice charges for refusal to hire.”
Faced with NLRB judgments and hefty fines for bouncing payroll checks, PSI filed for bankruptcy. But that wasn’t the end of the story. The Engels re-launched the company in 1998 under a slightly different name — Powerplant Maintenance Services, Inc. (PMSI), based out of Costa Mesa, Calif.
In 2001, the Orange County District Attorney’s Office began investigating the company for possible fraud related to unpaid workers. Their investigation focused on a maintenance project at AES Corporation’s Huntington Beach, Calif., power plant. The contract, signed in October 2000, called for completing the project within 90 days. In less than a year, PMSI received nearly $100 million from AES, but instead of paying subcontractors, workers, and creditors, the Engels diverted much of the money for personal luxury items including a Bentley, a Lear jet, and jewelry, according to the DA.
The DA’s office found that between 1998 and 2001, the company had gross revenues of $180 million. The office determined that Richard Engel filed false tax returns during that time. He reported a 2001 income of $144,231 even though he was receiving millions of dollars from PMSI.
Engel pled guilty to four felony counts of failing to file tax returns for his corporation, three felony counts of filing false personal tax returns, and one felony count of failing to file a personal return. He also admitted to a “sentence enhancing” charge of fraud in excess of $500,000 for causing a loss in excess of $1 million. He faces a sentence of up to 12 years and eight months in state prison.
Jolene Engel also failed to file personal income tax returns despite receiving a salary from PMSI, $8.5 million in 2000 for her stock in the company and approximately $3.7 million in 2001. She pled guilty to one felony count of failure to file tax returns for her corporation and one felony count of failing to provide material information in a tax return. She faces up to five years and eight months in prison.
Each of the Engels will also be required to pay taxes and restitution totaling $3.2 million.