Van Line Logistics News Article

Paul D. Bekins, majority shareholder and former president of Bekins Moving and Storage, pleaded guilty in U.S. District Court in Seattle yesterday to filing a false tax return.

The U.S. Attorney's Office charged Bekins with hiding $3.7 million in income to avoid paying $1.3 million in taxes in 1998 and 1999.

Bekins, 45, of Seattle, appeared before Magistrate Judge Mary Alice Theiler, who scheduled sentencing for Jan. 5.

He agreed to plead guilty to the single count, for which he could go to prison for three years, receive five years' probation, and pay a fine of up to $250,000. He agreed to work with the IRS to pay back taxes owed by him and his company.

Bekins agreed to testify against two Denver men who operated Tower Organization of Worldwide Executive Resources, which they claimed was a consulting company based in the Turks and Caicos islands in the Caribbean but was used to help members hide income off-shore to avoid paying taxes, federal prosecutors say.

The IRS' criminal-investigation office investigated Bekins for about five years, the U.S. Attorney's Office said.

"This is a personal matter and should not be reflected on the very fine company that carries my family's name or on the wonderful people who work there," Bekins said in a statement.

He apologized for the embarrassment he caused his family and the company's employees.

Bekins served as president of Mountlake Terrace-based Bekins Moving and Storage from 1988 to 2004, except for a hiatus from 2000 to 2002.

His wife, Karen Bekins, took over as president in March, and Bekins now serves as the Seattle branch manager, the company's Web site says. The company serves four states.

Bekins is great-grandson of Daniel Bekins, who founded Bekins Moving and Storage in Seattle in 1903. Daniel Bekins came from the same family that started Bekins Van Lines, a nationwide shipping company no longer owned by the family.

Federal prosecutors claim three men — Paul D. Harris and Lester R. Retherford of Denver and Robert N. Bedford of Florida — created Tower to set up fake companies with such names as ITM Management, Five Flags Global Services, Pearl Rim, Starboard Reef, and Caviada. Business owners like Bekins paid Tower $50,000 to use the companies' bank accounts and hide income.

The three partners were indicted in November 2002 by a federal grand jury in Denver on 31 counts of fraud, conspiracy to defraud the U.S. government, and failure to report foreign bank accounts. Their trial is to begin sometime early next year.

Paul Bekins' crimes were outlined in the plea agreement, including:

• Bekins teamed up with Russell J. Brown — who has not been charged — to buy and sell Bekins properties. In 1998, Paul Bekins sold the company's record-storage division for $9 million but reported he sold it for $6.5 million. But Bekins said he had agreed to sell the division to Brown or to pay him $2.5 million if the sale did not go through. Brown did not buy the division; he was paid $2.5 million, which he deposited into one of Bekins' overseas bank accounts.

• In 1998, Bekins transferred $773,750 from one of his off-shore accounts to another and then to one of Brown's off-shore accounts. Brown used the money to buy a warehouse from Bekins in Tacoma.

• In February 1999, Bekins sold a warehouse in Everett to an unnamed company for close to $1.4 million. He had agreed to sell Brown the warehouse for a set price or pay him a fee of $959,200. Bekins paid the fee into an account managed by Brown, who transferred the money into one of Bekins' bank accounts.

• Bekins paid $152,580 to ITM Management for services never provided. The transaction allowed Bekins to understate his taxable income by more than $183,000 in 1998 and to overstate business expenses by more than $149,000 that same year.

• In 1998, Bekins disguised $1.9 million of his own money as loans from Five Flags Global. $300,000 was deposited in a Bekins Moving and Storage account with Key Bank, and the remaining $1.6 million went into Bekins' personal account at Cascade Bank