A well-known Newport Beach philanthropist who ran a power plant refurbishing business was sentenced Friday to seven years in state prison for dodging taxes on more than $180 million of unreported income.
Prosecutors say Richard Engel, 70, and his ex-wife Jolene Engel, 63, diverted millions from their company, Powerplant Maintenance Specialists, Inc., between 1998 and 2001 to pay for personal luxury goods, including a Bentley and a down payment on a Learjet.
Despite this, they filed tax returns reporting little to no income.
Richard Engel pleaded guilty in 2011 to three felony counts of filing false personal tax returns and five felony counts of failing to file tax returns for himself and his company, according to the Orange County District Attorney’s office.
Jolene Engel also pleaded guilty in 2011 to one felony count of failure to file tax returns for her corporation and one felony count of failing to provide material information in a tax return.
She was sentenced Friday to three years of probation.
Both will be required to pay restitution in amounts set by an Orange County Superior Court judge.
Prosecutors say the Engels took money from their Costa Mesa-based company while neglecting a $108 million contract to refurbish the AES power plant in Huntington Beach in 2000.
Over the span of three months that year, AES payed more than $36 million while the Engels’ company “did virtually no work,” according to the District Attorney’s office.
At least $24 million of that money went straight into the couple’s pockets to pay for jewelry, cars, hotel stays and other luxury goods, prosecutors said.
Even after AES had paid the entire contract, the maintenance company still had not completed the work in 2001.
The Engels also failed to pay subcontractors on the job and creditors.
The District Attorney’s office began investigating after a labor union tipped them off to possible fraud on the AES job.
The Engels also took in about $72 million from work their company performed outside California between 1998 and 2001, prosecutors said.
When the former couple pleaded guilty in 2011, each was ordered to pay $1.2 million to the California Franchise Tax Board before their sentencing.
Prosecutors said Jolene Engel had paid about $1 million by Friday, and Richard Engel had paid only $350,000.