Gasoline Dealer Gets 10 Years in Scam : Taxes: In a complex scheme, dummy companies were used to defraud the IRS of $1.3 million.

A Sherman Oaks gasoline wholesaler has been sentenced to 10 years in prison for masterminding a complex scheme to avoid paying $1.3 million in federal gas taxes and to illegally undercut other wholesalers, authorities said Friday.

Oleg Yasko, 38, also was ordered by U.S. District Judge J. Spencer Letts to pay more than $1.3 million in restitution to the IRS on Thursday at his sentencing in Los Angeles. Yasko was convicted in July of defrauding the IRS of the 9.1-cents-per-gallon excise tax.

Yasko and five other Russian immigrants created a fictional company and generated documents that showed it was buying and selling their gasoline, Assistant U.S. Atty. Larry Cho said. The others have all been convicted or pleaded guilty in the case.

Yasko’s company would sell gas to a dummy company, which would assume responsibility for paying the tax. Then, the third company, secretly in league with Yasko, would buy the gas at a reduced rate and sell it to gasoline stations. This arrangement made it seem as though the dummy company had paid the tax, Cho said.

“They could afford to undercut every single other legitimate person in the industry,” Cho said. “But it was all a scam to avoid paying taxes and leave the phantom company--Janice Ventures--holding the bag.”

Yasko and the others operated the scheme between May and August, 1987, buying 14 million gallons of gas for $11 million and pocketing the $1.3 million in federal excise taxes they should have paid, prosecutors said.

Cho said the so-called “daisy chain” scheme was set up by first obtaining a federal tax exemption certification for the dummy company called Janice Ventures, purportedly headed by Janice Reese, who actually did not exist.

Under IRS regulations, a tax-exempt company is responsible for collecting excise taxes from its purchasers.

Yasko’s company, Jolana Enterprises, would then buy gas--minus the 9.1-cents-per-gallon federal excise tax--from refineries and then resell it to Janice Ventures, which would then be legally responsible for the taxes.

Janice Ventures would then “sell” gasoline--again minus the taxes--to three distributing companies that had been set up as part of the scheme. Those companies were able to sell to good-faith distributors at a below-market price by also maintaining that Janice had paid the taxes, Cho said.