Danville Couple Pleads in Underground Economy Case
Released: April 10, 2009
Sacramento – A Danville contractor pleaded no contest yesterday to a felony charge of diversion of construction funds and he and his wife pleaded no contest to three felony counts of state income tax evasion, the Franchise Tax Board (FTB) announced.
According to court documents, Rick Alvin Powers, 55, and Cathy Powers, 55, failed to report more than $582,000 in income during the years 2001 – 2003. They owe FTB more than $42,000 in unpaid state income tax. The diversion of construction charge stems from eight formal consumer complaints to the Consumer State Licensing Board (CSLB) that the couple would take huge down payments, as much as 62 percent, for high-end cabinets, then do little or no work at all. They would then lead the consumers to believe the cabinets were about to be finished, but additional money would be needed.
The Powers face up to 4 years 4 months in state prison as well as payment of full restitution to their victims including FTB. Their sentencing and restitution hearing is scheduled for later this year.
”CSLB’s lengthy investigation is moving through the legal process with positive signs,” said CSLB Registrar Steve Sands. “We are hopeful that a determination on consumer restitution will be announced later this year.” The failure to file tax returns is part of the $6.5 billion tax gap California faces each year. The tax gap is defined as the difference between the tax that is owed and the tax that is paid. In addition, businesses operating in the underground economy have an unfair competitive edge over their legitimate competitors. By avoiding their fair share of income tax, withholding tax, workers compensation insurance, and not being properly licensed, they are able to underbid jobs hurting the honest California businesses.
Contra Costa Superior Court Judge Mary Ann O’Malley accepted the plea in Department 1 of the Martinez Superior Court. Contra Costa Deputy District Attorney Steve Bolen prosecuted the case. This was a joint investigation between the Contra Costa District Attorney’s Office, CSLB, and FTB.
Editor’s Note: Background press release from January 2007 at Powers’ arrest: http://www.cslb.ca.gov/GeneralInformation/Newsroom/PressReleases/PressReleases2007/News20070112.asp.
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