AUSA VICKIE E. LEDUC or MARCIA MURPHY at 410-209-4885

AUGUST 30, 2007

BRIDGE PAINTING CONTRACTOR SENTENCED TO 37 MONTHS FOR TAX EVASION

Evaded $1,234,009 in Taxes;

Also Made 97 Cash Withdrawals of $9,000 to Conceal Income

Baltimore, Maryland - U.S. District Judge J. Frederick Motz sentenced Athanasios Reglas, age 57, of Edgemere, Maryland, today to 37 months in prison, followed by 3 years of supervised release for tax evasion and structuring financial transactions to avoid reporting requirements, announced United States Attorney for the District of Maryland Rod J. Rosenstein. Judge Motz also ordered Reglas to pay fines totaling $750,000, which was in addition to a previous order by the Court that required Reglas to forfeit $358,000 in cash that was found at his house during the execution of a search warrant.

U.S. Attorney Rod Rosenstein said, "Cases such as this one should remind people to file truthful tax returns and reassure honest taxpayers that anyone who defrauds the IRS faces criminal prosecution and a lengthy sentence in federal prison."

Francis L. Turner, Special Agent in Charge, IRS - Criminal Investigation said, "Tax evasion is not a victimless crime. Honest, hardworking Americans pay the price when others choose to evade their tax obligations. Taxes are essential to ensure the smooth and efficient operation of our government."

According to the plea agreement, Reglas owned and operated Reglas Painting Company, Inc., one of the largest bridge painting contractors for the Maryland State Highway Administration. For tax years 1999 and 2002, Reglas used the names and bank accounts of two fictitious companies he created to bill the Reglas Painting Company for subcontracting work that was never performed. Reglas spent the money he fraudulently obtained from the Reglas Painting Company on personal expenses and to generate cash. For example, Reglas used Reglas Painting Company funds to build his vacation home in Ocean City. In 2002 Reglas purchased a waterfront lot for $400,000. The purchase was preceded by a withdrawal of $300,000 from a money market account owned by the Reglas Painting Company and a withdrawal of $110,000 from the account of one of the shell companies. To finance the construction of the home on the lot, checks totaling more than $418,000 were written from the Reglas Painting Company operating account.

Tax Evasion

Reglas did not declare any of the Reglas Painting Company funds that he diverted to his own personal use on his personal tax returns for tax years 1999 and 2002-2004, underreporting his personal taxable income by $1,807,735, which resulted in additional taxes due of $658,018.

Reglas also made his payments to the shell companies and construction company appear as though they were legitimate subcontractor expenses of the Reglas Painting Company. Under this scheme, payments totaling $1,664,083 were fraudulently deducted as costs of goods sold on the corporate returns he filed on behalf of Reglas Painting Company for tax years 2000 through 2004, resulting in additional corporate taxes due of $575,991.

The total amount of personal and corporate taxes evaded from 1999 through 2004 was approximately $1,234,009.

Structuring Financial Transactions to Avoid Reporting Requirements

Reglas transferred funds from the Reglas Painting Company’s operating account to bank accounts established in the name of the shell companies, then to personal bank accounts from which he structured withdrawals of cash in order to conceal the amount of income he was receiving from his business. Reglas did this by making cash withdrawals of $9,000 from these accounts on 97 occasions from 1999 through 2003, in an effort to cause the banks not to file currency transaction reports, which are required for cash withdrawals of $10,000 or more. The total amount of cash involved in the structuring scheme was $873,000.

On April 26, 2005, the IRS and Department of Transportation, Office of Inspector General searched Reglas’s home and business, and seized numerous documents and approximately $358,000 in cash.

United States Attorney Rod J. Rosenstein praised the Internal Revenue Service - Criminal Investigation and the Department of Transportation, Office of Inspector General for their investigative work. Mr. Rosenstein thanked Assistant U.S. Attorneys Marty Clarke and Christopher Romano, who prosecuted the case.