Pfluegers’ Accountant Sentenced in Federal Tax Fraud Case

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Dennis Duban, the accountant for James Pflueger, who testified against his client
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Dennis Duban
Dennis Duban

HONOLULU – Dennis Duban, a flamboyant accountant for the rich and famous in Los Angeles and Honolulu, was sentenced Thursday by U.S. District Court Judge Leslie Kobayashi to 24 months in prison for conspiracy to defraud the Internal Revenue Service and assisting in the filing of a false federal income tax return in Honolulu. Duban also must pay a fine of $30,000 and perform 600 hours of community service.

Duban, who heads the posh Los Angeles-based Duban Accountancy, LLP, was indicted along with four others on September 5, 2010, for “conspiracy to defraud the United States for the purpose of obstructing the Internal Revenue Service in its collection of taxes.”

Also indicted were Dubin’s clients, two prominent Hawaii auto dealers, Charles Alan Pflueger and father, James Pflueger, and Pflueger employees, Julie Ann Kam and Randall Ken Kurata.

The criminal indictment alleged that personal expenses were deducted as business expenses on the Pflueger, Inc. corporate tax returns, which were signed by Kurata. The indictment alleged Pacific Auto Distributors, a company owned by Charles Alan Pflueger, paid additional personal expenses of Alan Pflueger, as well as Kam.

The U.S. Attorney added charges for James Pflueger and Duban in connection with James Pflueger’s sale of a property in California. The U.S. Attorney said more than $14 million in proceeds “were sent to a bank account located in Switzerland” and that James Pflueger failed to disclose the existence of the foreign bank account to the IRS.

Alan Pflueger, in addition to running the family auto business, is a winning race car driver like his father James Pflueger was
Alan Pflueger, in addition to running the family auto business, is a winning race car driver like his father James Pflueger was

Alan Pflueger pleaded guilty to one count of filing a false 2005 income tax return, “knowing it was materially false in that it failed to report taxable income,” and is currently serving 15 months in federal prison.

Kurata, an employee of Alan Pflueger as chief financial officer of Pflueger Inc., pleaded guilty to filing a false corporate income tax return for 2003. Additional counts were dismissed, but Alan Pflueger and Kurata agreed to cooperate in the prosecution of others charged in the case. Both Kurata and Kam were sentenced to probation.

Alan Pflueger directly implicated Duban in wrongdoing in his plea deal, alleging that Duban helped arrange the use of a Pflueger company to pay personal expenses of James and Alan Pflueger.

Duban pleaded guilty in October 2012 to conspiring to defraud the IRS and to assisting in the filing of a false tax return.

Prosecutors said Duban knew Pflueger’s personal expenses and that of Charles Alan Pflueger were deducted illegally on corporate income tax returns as business expenses.

Prosecutors also said Duban conspired with Pflueger to falsely report the tax on the sale of the Hacienda Corporate Plaza, a San Diego, California investment property owned by Pflueger Properties, by falsely increasing the land cost basis by some $7 million.

The property sold for for $27,500,000. The proceeds from the more than $14 million sale were sent to a Cook Islands trust and subsequently wired to the Wegelin Bank in Switzerland under the account name “Southpac Trustee International Inc., as Trustee of the Vista Pacifica Trust.”

James Pflueger
James Pflueger

Prosecutors said Duban and a New York-based firm were the investment managers for the account, but did not report James Pflueger’s beneficial interest in the Swiss account properly.

James Pflueger, 87, was the only of five defendants to fight the charges in court.

As part of the plea agreement, Duban testified against James Pflueger during his trial.

However, after successfully blaming Duban for his accounting troubles during a trial, James Pflueger was acquitted on March 20, 2013.

In a separate charge against Dubin, U.S. Attorney Florence Nakakuni and Assistant Attorney General for the Tax Division of the Department of Justice Kathryn Keneally said Duban also had an interest in other foreign bank accounts that he failed to properly report to the government.

For at least 2006 and 2007, Duban failed to report his interest in at least one New Zealand account, held in the name of Lookout Point Limited, they said.

Dubin admitted the tax loss to the government caused by his criminal conduct is $1 million.

Assistant United States Attorney Leslie E. Osborne, Jr. and Tax Division Trial Attorneys Timothy J. Stockwell and Dennis R. Kihm, handled the prosecution.

Duban is also being sued in civil court by the Pfluegers.

Comments

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3 COMMENTS

  1. Show of hands, who believes James Pflueger was innocent and Duban did all behind his back and even faked his signatures?

    As always when Pflueger is involved, I am sickened!

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