Clear49° WeatherClear49° Weather

IRS agent testifies that Cast-Crete president and CEO drained more than $93 million from company

TAMPA — IRS Special Agent Richard Goodwill didn't feel exhilarated even as he helped recover $40 million to pay part of the tax bill owed by Seffner building-supply company Cast-Crete Inc.

Ralph Hughes, a Hillsborough County political power broker and antitax crusader, had owned a majority stake in Cast-Crete and left a well-funded family trust when he died in 2008. The next year, Goodwill met Hughes' son, Shea, who was about to see a fortune vanish.

"I told him it was unfortunate, but it had to be done," Goodwill testified Wednesday at the trial of Hughes' partner, John D. Stanton III. "I felt a little uncomfortable. His dad had worked all those years and I'm taking the $40 million. … It's not a good feeling."

Shea Hughes, resigned to the loss, told Goodwill, "You've got to pay your taxes."

Goodwill's testimony highlighted the third day of Stanton's criminal trial in U.S. District Court and provided a glimpse at how Ralph Hughes, with Stanton, drained Cast-Crete's enormous profits, leaving the company unable to pay its taxes after Hughes died of a heart attack.

Stanton, 64, faces multiple charges of failing to file and pay both Cast-Crete's and his own personal taxes and then obstructing an IRS audit. Stanton, who also owned a stake in Cast-Crete, faces up to 15 years in federal prison if convicted.

Prosecutors told jurors that Cast-Crete made $160 million in profit from 2001 through 2007, but paid $93,717 in taxes. Stanton, they said, was the Cast-Crete executive in charge of filing those tax returns. The tax bill came to more than $100 million with interest and penalties.

Goodwill testified that Ralph Hughes, Cast-Crete's CEO, collected $50.5 million from the company from 2005 to 2007; and Stanton, an additional $43.8 million. Combined, that more than erased the $91 million in profit generated by Cast-Crete in that time frame, leaving nothing for the IRS, Goodwill said.

So the IRS went after the Hughes family trust, arguing that dividend payments to Hughes should have been paid only after the IRS took its cut.

Goodwill said the IRS settled a lawsuit with the family the day before a civil trial on the tax in late 2009. Shea Hughes wasn't angry at the agent.

"He had nothing to do with it," Goodwill said, speaking of Cast-Crete's tax liability. "He wasn't upset at me. He was very fair."

With an IRS criminal inquiry focused on Stanton since 2009, the role Ralph Hughes played in siphoning profits from Cast-Crete has gotten little attention.

Hughes, 77 when he died, had been a fixture in Tampa Bay's political scene for years, using his money and influence to support candidates who shared his antitax, small-government views.

But his legacy was tarnished with the 2011 revelation that Hughes provided $500,000 to the wife of Hillsborough County Commissioner Jim Norman in 2006 to buy a vacation home in Arkansas. Hughes regularly appeared before the commission. A federal investigation ended last year without charges being filed.

Unlike Stanton, Goodwill said, Hughes filed his personal taxes. And the IRS agent said Hughes made no attempt to conceal the payments he received from Cast-Crete.

Stanton is accused of playing a veritable "shell game" with his millions, transferring them to other corporations he controlled, prosecutors said.

William Kardash, Cast-Crete's division president in charge of manufacturing, engineering and operations, said Stanton told him that it had been Hughes who directed that corporate taxes not be filed. Kardash, who still works at the company, glared angrily at Stanton as he left the stand.

William R. Levesque can be reached at levesque@tampabay.com.

IRS agent testifies that Cast-Crete president and CEO drained more than $93 million from company 12/12/12 [Last modified: Thursday, December 13, 2012 12:23am]

© 2014 Tampa Bay Times

    

Join the discussion: Click to view comments, add yours

Loading...