To complete the record on this issue, I am posting excerpts from this week's Post-Dispatch article about the sentences handed down by federal District Court Judge Rodney Sippel against William and Kenneth Bialczak, brothers who were convicted of tax evasion in connection with the police towing scandal and who also (how coincidentally we may never know) were also in position to control the purse strings at the former St. Stanislaus Kostka parish. They were each sentenced to a year and a day in prison for felony offenses, with an additional combined fine of over $900,000.
The full story is here; below are excerpts with some commentary of my own.
Top figures in towing scandal get prison
BY TIM O'NEIL and Jennifer Mann
December 4, 2010
ST. LOUIS • A cozy relationship with the city police and questionable business practices put William and Kenneth Bialczak's towing business in the public spotlight, but it was tax evasion that is sending the brothers to federal prison.
Each was sentenced Friday to serve one year and one day, and ordered to pay stiff fines and back taxes.
U.S. District Judge Rodney W. Sippel granted them one request: letting them take turns in prison so one would remain available to run their enterprises, which include S&H Parking Systems and St. Louis Metropolitan Towing. William Bialczak will go first.
In September, the Bialczaks pleaded guilty on two counts each of evading federal taxes on income from their businesses, where federal agents seized $874,978 in cash during a raid Aug. 12, 2008.
That cash is available to pay fines and back taxes, although it is less than the total assessed by the court.
The nature of a primarily-cash transacted business is that it can be a source of temptation to some to hide some of the income. It seems easy to do, but the temptation to hide more and more starts to make it harder to hide, as well. This is a fairly recurring theme in businesses like restaurants, and similar types of operations. I suppose that in this case their cozy relationship with the police might have given an even greater feeling of security.
The men made no comment afterward and would not answer reporters' questions about one of the big public mysteries of the complicated case — the name of the police officer who, according to an FBI affidavit, regularly made closed-door visits to the S&H office and was once seen by a tow truck driver receiving cash in an envelope.
This is the big question the press wants answered. They want to know if it was ChiefJoeMokwa (tm). However, my big question is this: what role, if any, did the St. Stan's Board have in using, hiding, dispersing or otherwise benefiting from that slush fund of cash. Let me be clear: I have no evidence either way. St. Stan's may have absolutely no connection. But some coincidences and difficulties arise that beg for a press investigation-- an investigation it has so far refused to perform.
In an article some time ago about Bozek, Tim Townsend of the P-D wrote:
"There have also been questions about the priest’s trappings. He has negotiated a 143 percent salary hike, moved into a $157,000 Washington Avenue loft and leased a 2008 BMW for $450 per month."
Add the costs and legal fees to secure his green card (which some sources have placed as high as $80,000) to the condo and car lease, and Bozek cost the parish an early amount of something like $240,000.00 in debts and expenses. Add further to this Bozek's high (for a Catholic priest) salary (I won't publish this because I don't have a corroborating source) and you begin to wonder just from where did all the money come.
But remember, the parish was told by the Board that the Archdiocese would dissipate their assets if they obeyed the Archbishop!
So, perhaps St. Stan's did have the 10 bazillion dollars they claimed; or maybe they didn't; or maybe something else. I don't know. I only ask the question. But the press has absolutely failed to take an interest in this question, and I wonder why.
On Sept. 16, the brothers admitted that three years of their income tax filings understated their incomes by almost $1 million between them.
In court Friday, Assistant U.S. Attorney Hal Goldsmith called them "tax cheats" whose tactics were more sophisticated than just stuffing cash in desk drawers, although agents did find $40,000 in William Bialczak's desk.
Goldsmith said the brothers bought numerous life insurance policies and then cashed them in to "launder" money tax-free. He said William Bialczak has a home worth $400,000 and net worth of $3.5 million, and Kenneth Bialczak has a $750,000 home and net worth of $3 million.
"They had the ability to pay those taxes, they chose instead to live a higher life," Goldsmith said.
Sippel ordered William Bialczak to pay $370,185 in back taxes and penalties, and a $100,000 fine. Kenneth Bialczak must pay $347,314 in taxes and penalties, and a $75,000 fine.
Each brother will be on parole for two years upon release from prison. Sippel also ordered them to submit their businesses to federal review and told them to develop an "ethics policy."
I don't know why a business would have to submit their operations to a federal review. If the federal government wants a review of taxes, they have an audit power. I wonder what this means.
Sanford Boxerman, their lawyer, said his clients could be eligible for release to a halfway house after six to eights months in prison. "The judge essentially knew they were decent people we were dealing with," he said.
During the hearing, he and Goldsmith sparred over the 125 letters that friends sent to the judge on the Bialczaks' behalf, some addressing their charitable side. Again, how exactly was this manifested? Serving on a church board is indeed charitable, and usually thankless. Perhaps they were sincere in thinking they were doing the right thing when they led the rebellion against the Catholic Church and led their fellow parishioners into schism. Perhaps not.
Both have been members of the St. Stanislaus Kostka Church in St. Louis, where William Bialczak is a former chairman and board member.
Boxerman said the brothers "visited the sick and did more for the church than just give money. They washed dishes and cooked meals."
But Sippel scolded the two for violating the 'societal compact to provide for the general welfare. "It's easy to be charitable when you don't pay what you owe (in taxes). Who will pay for that soldier in Afghanistan, the air traffic controller at Lambert or the federal marshal if we all suddenly decide we have better uses for our money?" In my opinion, these two sentences are not quite congruent. The first is 100% correct. The second is a non sequitur, and also points out everything wrong with the prevailing attitude towards government. If it is all the same, I can agree with the first sentence and respectfully request that the parties mentioned in the second--okay, excepting the air traffic controller-- deserve an extended vacation.
A Post-Dispatch investigation in 2008 raised questions about the companies' relationship with the police (but not its relationship with St. Stanislaus) and its treatment of people whose vehicles were towed. Included were revelations that the business supplied cars free or at deep discount to a daughter of then-Police Chief Joe Mokwa and that the department has been shorted almost $700,000 for its share of fees. It has since sued, alleging a smaller loss.
The Police Department stopped doing business with S&H in July 2008, roughly when the scandal broke. Mokwa abruptly retired, after giving the Police Board conflicting statements about his daughter's use of the cars.
His departure came almost three weeks before the FBI raided all four S&H business locations. Mokwa's name never came up at Friday's hearing.
Among unresolved issues are the extent to which St. Louis police officers may have received kickbacks from the company, the subject of some FBI speculation in a court document, and the scope of officers' free use of cars, which the department has acknowledged but never detailed.
And that one other unresolved issue. I won't hold my breath.