Business manager gets prison time for $177M check-cashing scam in one of Oregon’s biggest tax evasion busts

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A judge on Monday sentenced David A. Katz, the president and general manager of his parents’ check-cashing business, to four years in federal prison for fueling what prosecutors called a tax evasion conspiracy to hide more than $170 million in wages.

Prosecutors described the case as one of the largest tax evasion cases ever prosecuted in Oregon.

Katz cashed more than 19,000 checks for $177 million submitted to his business, Check Cash Pacific Inc., by a handful of construction workers and phony subcontractors, said Assistant U.S. Attorney Robert S. Trisotto.

That allowed the workers to evade paying nearly $45 million in payroll and individual income taxes between 2014 and 2017, Trisotto said.

Katz was the “cash guy” at the business with seven stores in Oregon and one in Vancouver – responsible for every dollar of the checks cashed, the prosecutor said.

Katz and his lawyer argued for leniency, saying he was a dutiful son who took the fall for his parents, the owners of the business.

“He’s essentially a mule,” said defense attorney Aaron Katz. The lawyer is related by marriage to David Katz, who is married to his cousin.

The defense attorney slammed the government for failing to prosecute “the real tax evaders” and noted that David Katz is a married father of two teenage sons who has no prior criminal history.

David Katz told U.S. District Judge Karin J. Immergut that his mother introduced him to two of the men who brought checks to the family business as “good customers,” spoke to them in Spanish and made it clear to him that their checks were good.

“My parents taught me to honor and obey them,” he said. “I feared disappointing them.”

It never occurred to him that he was being misled, he said.

“I stand before you broken and ashamed,” David Katz told the court, reading from a statement.

His parents wrote a private letter to the judge, disputing their son’s account, according to Immergut. They did not testify at the trial.

A jury in June found David Katz, 48, guilty of conspiracy to defraud the United States and four counts of filing false currency transaction reports after a seven-day trial.

Prosecutors said Katz had one of the key schemers on speed dial. He collected between 2% and 2.5% in commissions for each check cashed and the check-cashing stores took in more than $4 million in commissions over the period of the scam.

Trisotto had sought a sentence of six and a half years for Katz. He said the term was on the low end of sentencing guidelines based on the size of the tax fraud but long enough to send a message to anyone who might want to follow in Katz’s footsteps.

Katz not only cashed tens of thousands of checks but filed false regulatory reports, withheld information from the Internal Revenue Service and warned an alleged accomplice when IRS agents started asking questions, Trisotto said.

Katz’s lawyer urged probation or home detention.

If the government was so intent on deterrence, it would have prosecuted the tax-evading construction companies, Aaron Katz said.

He said a psychologist who evaluated David Katz in August concluded that he is a high-functioning adult on the autism spectrum who is heavily governed by rules, inflexible and tries his best to do what he is told to do but misinterprets social cues and other subtleties.

David Katz should never have been placed in the role he held at the family business, his lawyer said.



David Katz’s parents, Howard and Sandy Katz, have since moved to Florida and disavowed their son, leaving him and his family on the precipice of bankruptcy, Aaron Katz said.

David Katz and his family have moved to Tucson, where he is now selling windows, his wife said.

Immergut said the jury found David Katz “intentionally” worked to deceive the IRS and she agreed.

“The conspiracy couldn’t have happened without the check-cashing that Mr. Katz engaged in,” she said.

She noted that his income jumped from about $75,000 in 2014 to $724,000 by 2017.

Yet Immergut said she found the prosecutor’s recommended sentence longer than necessary.

She said she weighed deterrence with Katz’s personal characteristics, his contribution to the community, his age and his crime-free life until this case. While she concluded that his autism spectrum disorder did not contribute to the crime, she said she took it into consideration.

Immergut ordered him to surrender on March 20 to start his sentence and agreed to recommend that he serve it at a satellite camp at the federal prison in Tuscon. She also ordered him to pay $44,877,254 in restitution.

Katz’s lawyer said he intends to appeal and request a delay to the prison sentence pending the appeal.

The defendant’s supporters filled two rows of the public gallery. His former rabbi and his wife described him as a loving and dedicated husband and father who strives to help others.

Rabbi Ken Brodkin, formerly of Portland’s Congregation Kesser Israel but now working for a synagogue in central New Jersey, flew back to Oregon attend the sentencing. He said David Katz has lived a modest life. That contrasts to his parents who, according to Brodkin, drove fancy cars, owned ostentatious homes and are now “throwing him under the bus.”

Katz is the second person to be sentenced in the conspiracy. One of the men who brought checks to him was sentenced to two and a half years in prison.

Two others await sentencing, one awaits trial and another remains a fugitive, according to court records.

The six represent the tip of the iceberg, prosecutors said. Many others involved have not been found because of the use of fake identities, they said.

Prosecutors noted in court papers that this tax evasion scheme has pervaded the residential construction industry in Oregon for 20 years. Hundreds of construction company owners, subcontractors and workers have engaged in similar crimes but weren’t identified in this investigation, prosecutors acknowledged.

One of the owners of a Hillsboro-based construction company, Tony Bennett, was a government witness at trial and admitted on the stand that he had been granted immunity from prosecution and from paying $4 million in taxes owed in exchange for his testimony.

Investigators said Bennett failed to withhold payroll taxes when cutting checks to a sham subcontractor. Bennett testified that he looked for additional workers to supplement his company’s 12 to 15 employees after his business, Titan Exteriors of Hillsboro, snagged a big job to do exterior siding or window installation on new homes. Bennett would write a check for the work to the sham subcontracting company, another person would cash the check and he’d pay the additional men doing work for him under the table with the cash.

“A lot of non-permanent workers will only work for cash,” Bennett testified. “We needed to get the work done.”

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