Businessman Fails to Report $12.5 Million in Income

After failing to report several million dollars in business income, a North County businessman will be forced to pay restitution to the Franchise Tax Board, and may also be sentenced to up to three years in prison.

Rienk Ayers, who owns three different companies in Santa Maria, will be forced to pay $271,141 in taxes, penalties, and interest after pleading no contest to one count of failure to file an income tax return, said California State Attorney Edward Stelly, who prosecuted the case.

Ayers, however, argues with the amount, saying that he owes less than $100,000. “It sounds like a smear campaign that’s going on here,” Ayers said. “It’s obvious [the Franchise Tax Board] is playing hardball.”

Ayers was originally charged with four offenses for failing to file more than $12.5 million in income for Chameleon Engineering, a company he owns which builds disguises for cell phone towers, Stelly said.

It will now be up to a judge to decide how quickly Ayers will have to pay the back taxes, and if he will even be incarcerated, Stelly said. “These typically aren’t always prison cases,” Stelly said, adding that though Ayers pled to a felony, the nature of the offense allows the judge flexibility in sentencing. “I commend him for taking responsibility and pleading guilty,” Stelly said.

Though Ayers pled to knowingly failing to file taxes, Stelly said he had sought the services of Innovative Financial Consultants, a Phoenix-based firm that was shut down four years ago after a Department of Justice investigation found that it was selling tax-evasion schemes disguised as trusts. “They told people that if they structured their company a certain way, there would be no tax liability,” Stelly said. “They tried to make it fly in California.”

Ayers is scheduled to be sentenced in Santa Barbara County Superior Court on May 18.

CLARIFICATION: This report was based largely on information provided by the state’s Franchise Tax Board. However, the defendant in this case, Rienk Ayers, has asserted that this summary misconstrues the matter. According to Ayers, he did report the $12.5 million, but it was not explicitly income and rather was the combined revenues of a number of different companies. As such, the income tax owed is not directly linked to total revenues. He says he submitted tax returns for the incomes of the businesses in question, but admits that one year may not have been filed properly. He also claimed, contrary to the government’s press release, that he pled “no contest” to only the one minor charge, and that prison was “specifically not part of the deal.” He claims to have always been willing to file necessary returns and pay required taxes, but prior to the settlement, was disputing the amounts due.