A former Spokane business executive was sentenced to a year in federal prison Wednesday for federal income tax evasion and ordered to pay a substantial sum to reimburse his former company for improper billing.
William K. Jones, 59, the former chief financial officer and general manager of Fasteners Inc., had previously pleaded guilty to four counts of tax evasion for not reporting $244,000 in income for the tax years 2012-15. He also agreed to pay a total of $92,734 in unpaid taxes for the year 2011, even though the statute of limitations prevented federal prosecutors from adding a fifth charge.
As part of the plea agreement, the government agreed to dismiss a related wire fraud case against Jones. In the alleged fraud case, Jones reportedly hid statements that would have shown he used a company credit card to pay for personal expenses, including his daughter’s college tuition and landscaping at his residence.
To settle that case, Jones agreed to pay another $310,453 in restitution for those billing irregularities. Although he faced just more than two years in federal prison for the tax evasion convictions, U.S. District Court Judge Frem Nielsen agreed to sentence him below the standard range because of Jones’ age “and other positive factors.”
“You are a good person and a likeable guy,” U.S. District Court Judge Frem Nielsen told Jones. “Everyone is required to pay the taxes that are due. The public has to know there are consequences.”
Jones, who also formerly worked as an accountant for KXLY-TV, told Nielsen that he’d lived his entire life in Spokane. He said Fasteners owner Dennis Hanson reneged on a handshake agreement to give him 10 percent total sale price of the company. Hanson sold Fasteners Inc. to Fastenal Co. of Minnesota for $24 million in 2015, according to court testimony.
Jones said he was expecting that promised money when he made the fraudulent book entries.
“I intended to settle all the loss I caused,” Jones said. “I will use every future resource I can muster to pay all the obligations. Whatever happens, I own this. I can blame no one but me.”
Assistant U.S. Attorney George Jacobs agreed to the plea deal with defense attorney Roger Peven. But Jacobs asked Nielsen to consider the totality of the case, including how Jones used his expertise as an accountant to hide his financial tracks, as the judge considered a proper sentence.
“He didn’t do it once. He did it multiple times. Mr. Jones pays his (daughter’s) college tuition … like it was a corporate expense. He fabricated invoices,” Jacobs said. “So your honor, deterrence would ring hollow if the court did not impose a period of prison in this case.”
Peven, the defense attorney, asked Nielsen to sentence Jones to five years of structured probation so that Jones could keep working to pay off the restitution amounts.
“It’s punishment … but it has to be tempered with common sense,” Peven said. “I believe (probation) protects society more than what is suggested by the government.”
The courtroom was full Wednesday with friends and family who came to support Jones. His wife of 36 years, Deanna Jones, spoke on his behalf.
“I could have filled this courtroom with everyone who loves him,” she said. “I know his heart. He is a really loved person. We need this person in our lives. For 55 years, he was a pillar of this community.”
While he went below the guidelines, Nielsen decided to sentence Jones to just a year in federal prison.
“This is a serious matter. The money … was improperly gained. That was a breach of trust,” Nielsen said.
Still, the judge said he recognized Jones’ support and defense arguments on his behalf.
“You’ve got a great family,” Nielsen told Jones. “There is no question you are a good person and will get your life back in order.”
Local journalism is essential.
Give directly to The Spokesman-Review's Northwest Passages community forums series -- which helps to offset the costs of several reporter and editor positions at the newspaper -- by using the easy options below. Gifts processed in this system are not tax deductible, but are predominately used to help meet the local financial requirements needed to receive national matching-grant funds.
Subscribe now to get breaking news alerts in your email inbox
Get breaking news delivered to your inbox as it happens.