No-Contest Plea Entered in $8.7-Million Tax Fraud Case

The former owner of a chain of Los Angeles County service stations pleaded no contest Monday to five misdemeanor counts stemming from an $8.7-million sales tax fraud that the city attorney’s office described as the largest in state history.

Charles Nathan Shooster, 56, of Beverly Hills, who had owned the 17-station Sunny Gas and Good Cent Gas chain, faces a maximum term of 18 months in County Jail when he is sentenced Nov. 3, authorities said.

When initially charged with 22 misdemeanor counts in mid-1986, Shooster was accused of under-reporting gross sales by $34 million between April, 1983, and June, 1985, resulting in a tax liability of $3.3 million. But a subsequent audit for the period dating back to April 1, 1980, when Shooster went into business, projects unpaid taxes and penalties totaling $8.7 million, City Atty. James K. Hahn said.

However, Shooster’s attorney said Monday that his client still believes the total tax liability is much less than $8.7 million and that the situation arose only because of “economic chaos” resulting from predatory pricing practices in the service station industry.

“He barely collected enough to pay for the gasoline and simply pay the help, the lights and the rent--he had no margin,” said attorney John P. Hanrahan. “There was absolutely no criminal intent.”

The Shooster case was the first prosecution under a pilot program designed to catch sales tax evaders through audits by the state Board of Equalization.

The board has initiated a civil lawsuit to recover the taxes by attaching the assets of Shooster and his wife, Sonya, 42, who have filed for bankruptcy. Misdemeanor charges against Sonya Shooster have been continued for disposition until her husband’s sentencing, authorities said.