State says Duluth man cashed $800,000 in erroneous checks
A Duluth businessman is accused of cashing two checks totaling almost $800,000 and spending the money erroneously refunded to him by the Minnesota Department of Revenue.
Kevin Charles Owens, 50, of 1919 Minnesota Ave., is charged with four felonies -- theft, failure to pay over state funds, failure to pay income tax and failure to file a tax return.
According to the criminal complaint filed Tuesday in St. Louis County District Court, Owens owns Owens Yacht Sales at 371 Canal Park Drive.
He couldn't be reached for comment. A phone number listed for the business on several websites was not accepting calls Tuesday.
Owens has been summoned to appear in court on Nov. 2.
According to the criminal complaint:
On March 18, 2008, the Department of Revenue issued two checks made payable to Owens Yacht Sales Inc., in the amounts of $560,980.12 and $221,982.06.
The department said the checks were issued erroneously "due to human error" and "somewhat complicated internal accounting errors."
According to bank records, the checks were redeemed by the defendant on March 25, 2008.
A Revenue Department internal investigation found that the checks were inadvertently issued when its personnel were reviewing and attempting to correct old taxpayer account ledger systems.
The complaint alleges that Owens was notified of the erroneous refund and was repeatedly requested to return the funds or to make arrangement for payments, but refused to do so.
The Revenue Department conducted an audit of Owens Yacht Sales during 2000-2002 based on information that the business had stopped filing sales, income and business tax returns despite continuing as an active business. The defendant did not cooperate with the audit process. The audit was concluded in May 2004, with a determination that no sales tax was owed and that no refund was due.
In July, 2008, a Revenue Department examiner received a letter from Owens saying he intended to appeal the notices he received indicating the erroneous refunds. The defendant provided no evidence or explanation for why he redeemed the erroneous checks or why he felt entitled to the money.
That same month, Owens allegedly told an employee in the appeals and legal services division of the Revenue Department that he had been hassled enough by the department and that he intended to keep the money.
Bank records indicate that the defendant spent the entire $782,962.18 of State of Minnesota funds within several months.
In a 2008 civil trial in St. Louis County District court, a jury determined that Owens owed two parties more than $800,000 for breaching his contract to build condominiums ready for occupancy on Park Point.