Anaheim Man Given Jail Term in Tax Shelter Scam

A federal judge sentenced an Anaheim tax preparer and his son to prison Monday for bilking about 250 Orange County investors, many of them retired, out of an estimated $10 million through a series of fraudulent tax shelters.

U.S. District Judge Pamela A. Rymer ordered Leslie Wilmar Hawkey to spend five years in prison and to pay $825,000 to people he defrauded through 157 limited-partnership tax shelters. Rymer sentenced Hawkey’s son, Leslie Wilmar Hawkey Jr., an attorney from Gillette, Wyo., to two years in prison and ordered him to pay $75,000 in restitution.

“I recognize normal business intentions, but what developed was a fraud of major proportions, (of a) sophisticated nature,” Rymer said.

Rymer said investors who lost money should file claims with the state Department of Justice, which worked with the U.S. Attorney’s office to prosecute the Hawkeys.

In May, the elder Hawkey pleaded guilty to one count each of mail fraud, conspiracy and aiding and abetting in the preparation of false tax returns. His son pleaded guilty to two counts of mail fraud.

About a dozen angry investors attended Monday’s sentencing hearing. Afterward several said they were pleased that the Hawkeys received prison terms but added they will be happier when their money is returned.

In addition to losing their initial investments, which in some cases involved hundreds of thousands of dollars, many investors have received claims from the Internal Revenue Service seeking millions of dollars in back taxes and penalties for the investments, according to federal prosecutors. Investors said their claims are being negotiated individually with the IRS.

In 1978-84, the senior Hawkey operated Hawkey Tax and Investment Service from a storefront office in an Anaheim shopping center. In addition to preparing tax returns, he created a variety of limited partnerships, selling investors interests in non-existent gold and silver mines, property in Wyoming and a failed crop of Jerusalem artichokes that was eaten by a herd of wild antelope, according to court records.

The senior Hawkey told his clients that their investments were fully backed by a $9-million “Hawkey Family Trust,” but prosecutors said the trust was a sham.

Richard Marmaro, the younger Hawkey’s attorney, said his client was bullied by his “overbearing” father into setting up and managing the tax shelters. “He should have said, ‘Dad, enough is enough,’ but he didn’t, and that’s why he’s here (in court),” he said.

Marmaro said his client lost his license to practice law after pleading guilty to the felony charges.

Bruce Hochman, who represented the elder Hawkey, said his client’s pride prevented him from admitting his tax shelters and investments were failing. Hochman said Hawkey, a former Marine Corps warrant officer, wanted to “make himself the king of the small tax shelter world.”

Deputy Atty. Gen. Judith Hayes, who prosecuted the case with Asst. U.S. Atty. Richard Drooyan, said that what the Hawkeys did was a “true tragedy” because they defrauded “widows, postal carriers and other people who couldn’t afford the loss.”

The Hawkeys declined comment Monday.