The long-time manager of a Hoquiam wood shavings business was sentenced in U.S. District Court in Tacoma to three years in prison and three years of supervised release for thirteen federal felonies related to his theft of $1.3 million from a family business, announced U.S. Attorney Annette L. Hayes. Willis D. “Bill” Lonn, Jr., 68, of Aberdeen was convicted in October 2016 of nine counts of mail fraud, two counts of income tax evasion, one count of money laundering conspiracy and one count of interstate transportation of stolen property following a six-day trial.
At the sentencing hearing U.S. District Judge Benjamin H. Settle said Lonn “profoundly abused the trust of his employer [and] callously betrayed family members and took what belonged to the company.”
“This defendant did not commit just a single act of embezzlement, rather, over the course of years, he stole from the company almost every day,” said U.S. Attorney Annette L. Hayes. “He betrayed the trust of his family members to satisfy his greed and then used the stolen money to start his competing business harming his victims even further.”
According to records filed in the case and testimony at trial, Lonn was a long time manager for Long Beach Shavings Company (LBS). The company was owned by Lonn’s uncle and cousins and was based in California. The company had one plant in Hoquiam, Washington where it processed wood shavings for use on farms, at horse shows or in pet stores. Lonn had worked at the Hoquiam plant for about a decade when he launched a scheme in the 2000s to steal and sell the wood shavings products for his own enrichment. Lonn did this by selling the shavings directly to customers in Washington and Oregon without turning the proceeds over to the company.
Later in the scheme, Lonn arranged to get wood chips for free from a Montesano lumber mill, but he informed the parent company that an entity named M & R Lumber needed to be paid for the wood shavings. Lonn posed as M & R Lumber and created phony invoices that he mailed to LBS to bill them for the shavings. Lonn then kept the money. Between the two schemes Lonn obtained more than $1.3 million from LBS. He was terminated by the company in 2011 when the full scope of the scheme came to light.
Testimony at trial revealed that Lonn never paid income taxes on the ill-gotten gain in tax years 2009 and 2010. Had Lonn reported the income his tax bill for those years would have increased by more than $80,000.
“At this time of year most Americans are busy fulfilling their obligations as citizens of our country by preparing and filing honest and accurate tax returns. However, a small percentage of the population selfishly shuns their civic duty by dodging the tax laws that the majority of us observe,” stated Special Agent in Charge Darrell Waldon of IRS Criminal Investigation. “When this happens, IRS Special Agents stand ready to defend our nation’s tax system by bringing scofflaws to justice and ensuring a level playing field for all of us.”
Anthony Galetti, Inspector in Charge of Seattle Division of the U.S. Postal Inspection Service, stated, “Today’s sentencing confirms that anyone who uses the U.S. Mail to operate a fraud scheme will be held accountable. I’m pleased to see justice in a case which had such an impact on the community of Hoquiam.”
The case was investigated by the U.S. Postal Inspection Service (USPIS) and the Internal Revenue Service Criminal Investigation (IRS-CI).
The case was prosecuted by Assistant United States Attorneys Brian D. Werner and Nicholas Manheim.