Once a co-owner of one of the nation's largest precast concrete manufacturers, John Stanton is now facing up to 10 years in federal prison after a federal jury convicted him Monday of federal tax evasion charges.
Stanton co-owned Cast-Crete Corp. with the late conservative powerbroker Ralph Hughes. Stanton was convicted after a week-long trial on one charge of attempting to impede the administration of federal tax laws and seven counts of failing to file personal and corporate tax returns for several years.
Prosecutors say Stanton siphoned millions from the company through a series of shell corporations, failed to file tax returns and tried to confuse an IRS auditor. The prosecution said Stanton funneled so much money from Cast-Crete that the corporation was unable to pay more than $50 million in federal tax liabilities.
Jurors deliberated about four hours before handing up their verdict: guilty of all eight charges.
Stanton showed no reaction to the verdict, although some friends and family members in court, including his pregnant girlfriend, sobbed quietly.
During a break in the proceedings, Stanton turned to his supporters and said, "Stay positive."
Stanton's son, also named John, told reporters afterward, "His life on a balance sheet – he's a good father and I love him."
Defense lawyer Paul DeCailly said an appeal would be discussed.
Cast-Crete's current chief financial officer, James Lambeth, said it was "a sad day for his family," referring to Stanton.
Ralph Hughes' son, Shea, who has taken over running Cast-Crete, said he thinks what happened is "a shame for so many people … So many decisions that nobody to this day even understands why John did what he did."
DeCailly said in closing arguments that Stanton chose accuracy over timeliness, not filing corporate tax returns because of confusion over a planned merger. Stanton, the lawyer said, was unsure which company should have filed the returns. And he said that confusion created uncertainty about what should be on Stanton's personal returns.
Stanton believed that had the mergers gone through the way he planned, the company would have had no tax liability.
"John testified he didn't want to file false tax returns," DeCailly said, also shifting responsibility to Hughes. "It's clear that while John Stanton may have been president, Ralph Hughes ran the company."
"I'm not going to speculate as to whether Ralph Hughes would have been a defendant had he lived," responded Assistant U.S. Attorney Robert Monk, "but none of the arguments (the defense) has made distracts from his culpability, not one bit."
Monk also noted that Hughes and other company directors filed their own personal tax returns, although the directors were fined for underpaying.
Monk said Stanton, a former accountant with 30 years of business experience, knew the law required that tax returns be filed for corporations regardless of tax liability. Some of the returns have yet to be filed even though the corporation and Stanton made millions in those years, Monk said.
DeCailly accused the prosecution of trying to foment envy on the part of jurors by introducing evidence of expensive cars and houses Stanton purchased. The point of investing money in a company and building it up with a partner is to reap the financial rewards, the defense lawyer said.
"Stanton drained, sucked everything out of that corporation," Monk said. "There was no money left to pay taxes."
Monk noted none of the cars or properties – none of Stanton's assets, in fact – were in his name. His plan, the prosecutor said, was to create confusion for the IRS.
Shea Hughes and Lambeth said Cast-Crete was nearly bankrupted by what happened but they have managed to resuscitate the corporation, which now employs about 135 people. It had 450 at its peak a few years ago.
The company now has annual revenue of about $24 million, compared to $190 million when it was flush.
"Thank God we've turned the corner and we're seeing the light at the end of the tunnel," Hughes said, "and it's not a train."