Founders of Neways guilty of tax evasion

Ex-couple failed to report $3.2 million to the IRS

A federal jury on Friday convicted the founders of Utah-based Neways Inc. of cheating the Internal Revenue Service out of more than $1 million by failing to report millions of dollars in commissions they received from their company's overseas divisions.

Jurors found Thomas E. Mower Sr. and Leslie DeeAnn Mower each guilty of one count of conspiracy to defraud the United States and six counts of tax evasion. The former husband and wife face up to five years in prison and a $250,000 fine on each charge when they are sentenced June 21.

Former Neways corporate attorney James Thompson also was convicted of one count of conspiracy and one count of obstructing an IRS investigation.

The guilty verdicts follow an eight-day trial before U.S. District Judge Dale A. Kimball that began with federal prosecutors telling jurors the case was one of "deception, concealment and outright greed on the part of a husband, a wife and their attorney."

During closing arguments Thursday, attorney Caryn Mark, with the U.S. Department of Justice's Tax Division, said the government's evidence "overwhelmingly established" that the three defendants were guilty on all counts.

According to the government, Thomas and Leslie Mower failed to report $3.2 million of personal income collected as commissions from Neways' divisions in the United States, Australia and Malaysia, ultimately saving themselves a tax bill of $1.3 million.

The Mowers contended that the money was actually meant as loans from Neways Australia to Neways USA, and that they did not personally benefit from the funds. Thompson was accused of manufacturing a fake loan document to support the Mowers' claims.

Mark, however, highlighted for jurors testimony from the former managing director of Neways' Australian division that he was unaware of any loans to the U.S. corporation. Mark noted that the man testified he personally mailed monthly commission checks to the Mowers' attention to Neways' Salem office.

Defense attorneys maintained that all of the money went back into the corporation, not into the Mowers' pockets. The couple lived a "modest, humble" lifestyle, said Max Wheeler, a member of Thomas Mower's defense team.

The government failed to present evidence of the lavish lifestyle one would expect to follow an extra $3 million in personal income, Wheeler said during his closing argument Thursday.

"I can tell you, ladies and gentlemen, if the government had evidence that the Mowers were spending money like drunken sailors . . . you would have seen that in neon lights up here on the screen," Wheeler said. "The reason you heard no evidence of it is because it didn't happen."

Even if the money should have been reported on the couple's personal income taxes, the mistake doesn't add up to the "willfulness" requirement needed to convict the couple, Wheeler said.

"If they're wrong, maybe they're wrong," he said. "But it doesn't mean they're guilty of crime."

Neways sells cosmetics, skin-care products, health supplements and other personal care items in the United States and at least 35 other countries.

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E-mail: awelling@desnews.com

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