The IRS claims in District Court that three developers conspired to conceal their income by overstating business expenses, underreporting income and moving money among dozens of bank accounts in the U.S. and Australia.
Three wealthy real-estate developers, including a former state Senate candidate, failed to report nearly $25 million in income from three Vancouver, Wash., shopping-center projects, an Internal Revenue Service agent alleges in court documents.
No charges have been filed against the three: Bellevue developer Winston Bontrager; his girlfriend, Pauline Anderson; and his son, 2004 Republican state Senate candidate Jason Bontrager. Agents raided their homes and offices this month as part of an investigation into their income since 2000 from the Salmon Creek, Hazel Dell and Eastgate Plaza developments.
Joseph Lopez, an agent with the IRS Criminal Investigation Division, wrote in a search-warrant application filed in U.S. District Court that the three conspired to conceal their income by overstating business expenses, underreporting income and moving money among dozens of bank accounts in the U.S. and Australia.
The Bontragers and Anderson could not be reached for comment. The three “are living lavish lifestyles residing in million-dollar homes in Washington, driving luxury automobiles, and vacationing in million-dollar winter homes in Southern California,” Lopez wrote.
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Meanwhile, they were paying little to no federal income taxes, he alleged. Nor was Winston Bontrager, 61, paying $680,000 in restitution he still owes from a 1994 fraud conviction.
The shopping-center deals brought the three at least $47 million, and they failed to report $24.7 million, Lopez wrote.
One of the deals involved Seattle real-estate magnate Michael R. Mastro, who last year was forced into one of the biggest bankruptcies in state history. A Mastro-owned company bought the Eastgate property from a Winston Bontrager-run entity in 2005 for $14.3 million. In addition, millions were transferred between Mastro and Bontrager and Anderson in 2004, 2007 and 2008, according to Lopez’s filing.
James Frush, one of Mastro’s lawyers, said Mastro had no involvement in the tax affairs of the Bontragers or Anderson, and simply moved money to accounts they specified. Bontrager was involved with Mastro in one other shopping-center project, in Walla Walla, but was “not a primary business associate,” Frush said.
James Rigby, the court-appointed trustee charged with finding and liquidating Mastro’s assets and distributing the proceeds to his creditors, said Bontrager approached him earlier this year seeking to retake title to the Eastgate property, where development has stalled.
Bontrager’s bid was rebuffed, Rigby said.
Mastro owes Bontrager’s Eastgate entity $1.2 million, according to bankruptcy-court records. Anderson, who apparently invested money with Mastro, has filed a claim against him for $3 million.
Seattle Times business reporter Eric Pryne contributed to this report.