Businessman Charged With Tax Evasion : King of Solid Oak Inc. President Is Arrested

In a crackdown on tax evaders following California’s tax amnesty program, a Garden Grove businessman has been arrested on multiple felony charges stemming from what police and state Board of Equalization officials allege was deliberate under-reporting of $590,000 in sales tax revenue by his company.

The arrest by Garden Grove Police on Thursday of Dragan Carl Drndarski, president of King of Solid Oak Inc., capped an investigation by state auditors and local police that had begun with an audit last year of the furniture retailer’s sales tax records.

Drndarski’s company, based in Garden Grove, last year filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code.

Drndarski, a Yugoslav national, was charged with five felony counts, including three counts of grand theft and two counts of conspiracy, as well as with five misdemeanor counts of filing false sales tax returns, said David Wagner, an Orange County deputy district attorney. Drndarski was freed after posting bond to cover $250,000 bail.

Five Counts

The Orange County district attorney’s office also has filed two felony conspiracy counts and five misdemeanor counts of filing false sales tax returns against Dennis Kleen, who was employed as King of Solid Oak’s controller from 1982 until earlier this year.

Neither Drndarski nor Kleen could be reached for comment Monday.

Kleen originally was arrested on six misdemeanor counts in October in connection with the case. Following his arrest, Kleen was questioned by police, who also interviewed several former King of Solid Oak employees before filing the felony theft and conspiracy charges against Drndarski, said Garden Grove Detective Fred Aiken.

Wagner said the two men are being charged in connection with $590,000 worth of fraudulent returns filed between 1982 and 1984.

The move against the company is “definitely the largest one of its kind in dollars and cents in the state,” said Sid Mandel, a spokesman for the Board of Equalization.

Program ‘Intensified’

Although people suspected of tax cheating usually are the targets of civil actions, he said, felony charges will become increasingly common.

“We promised that after the termination of tax amnesty last March . . . the program would be stepped up and intensified,” Mandel said. “We’re going to keep faith with the people who paid up under tax amnesty.”

Law enforcement and state tax officials declined to specify what companies might be under investigation for avoiding business taxes, but Wagner said “other investigations are pending” that may result in criminal charges.