A co-owner of 61 Marine and Sports in Cottage Grove admitted in court on Tuesday that he defrauded Minnesota of approximately $3.2 million in sales tax, penalties and interest.
Jeffrey S. McKenzie, 59, of Hastings, pleaded guilty in Washington County District Court to three felony counts of knowingly aiding in the preparation of tax returns that were fraudulent or false. He was charged in August.
61 Marine and Sports, which opened in August 1997, sells boats, boat motors, ATVs, snowmobiles and parts and accessories.
A preliminary investigation in August 2018 found that a sales tax audit had been initiated on the business by the Minnesota Department of Revenue, leading to a criminal investigation by the agency and the Washington County sheriff’s office.
According to the criminal complaint, McKenzie was charged with providing the monthly sales-tax collection information to the business accountant who filed the sales tax returns. The complaint alleges that McKenzie knowingly under-reported the monthly taxable sales to the accountant, who then filed the false sales tax returns.
The complaint states that computer files, sales tax returns and paper documentation seized during the execution of several search warrants showed the business under-remitted its monthly sales tax in 59 periods from January 2013 through September 2018.
McKenzie admitted in court on Tuesday to altering financial entries on Post-It notes on three different occasions “so subordinates would convey to the bookkeeper in charge of submitting tax return information to the state … false and reduced sales tax amounts that were due,” according to the Washington County Attorney’s Office.
“The sales-tax system is an important source of revenue for the State of Minnesota,” Washington County Attorney Pete Orput said. “All of our citizens suffer when people use illegal means to evade their tax responsibility.”
Sentencing for McKenzie is set for Dec. 2. He is expected to receive a sentence of probation for up to five years; the remainder of the sentence, including any restitution, will be up to Washington County District Judge Greg Galler at the time of sentencing, said Rick Hodsdon, Assistant Washington County Attorney.