Judge fines Chicago's Tri State Metal

Company must pay $2.1 million fine for federal tax and currency transaction charges.

Tri State Metal, a Chicago scrap metal company, has been sentenced after pleading guilty to federal tax and currency transaction charges, admitting that it engaged in cash transactions that resulted in underreporting its corporate income and underpaying its payroll taxes.

The company was fined the maximum amount of $2.16 million by U.S. District Judge Charles Kocoras in Federal Court in Chicago. Tri State also was ordered to pay restitution in the amount of $580,907 to the IRS, and it agreed to an order to forfeit nearly $2 million.

Tri State was charged with one count of obstructing and endeavoring to obstruct and impede the IRS and one count of structuring cash transactions less than $10,000, according to the U.S. Attorney’s office.

The charges were the first resulting from an ongoing investigation by the IRS into cash transactions in the local scrap metal industry.

Prosecutors claimed that between September 2008 and September 2012, Tri State Metal cashed more than $6.41 million in checks drawn on its bank account and payable to fictitious people. The company then used the cash to pay vendors and employee wages, prosecutors allege.

Additionally, the company is said to have filed false federal corporate income tax returns for 2009, 2010 and 2011 that understated gross sales by more than $2.92 million.

Tri State Metal also failed to report about $840,700 in cash spending for the benefit of the deceased company owner and president, according to the U.S. Attorneys Office.

In a statement by Tri State Metal, emailed through its attorney, the company says, “Tri-State's now deceased owner made some poor decisions. The company and the new owners are glad to put this behind and are looking forward to the future.”

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