Rocklin Business Owners Plead Guilty to Conspiracy to Evade over $1 Million in Taxes
SACRAMENTO, Calif. — Daniel Stewart, 59, of Lincoln, and Luke Burroughs, 59, of Loomis, pleaded guilty today to conspiracy to defraud the United States, U.S. Attorney Phillip A. Talbert announced.
According to court documents, Burroughs and Stewart are the co-owners of Western Baler and Conveyor (WBC), a Rocklin‑based business that sells and services industrial conveyor belt systems. During the period of the conspiracy, WBC grossed several million dollars annually. Beginning in 2016, Stewart and Burroughs attempted to decrease their personal and company tax burdens by disguising personal expenses as company expenses. For example, Stewart remodeled his home, installed horse stables, and built a swimming pool and paid for all of it through WBC checks made to look like company expenses. At the same time, Stewart and Burroughs padded WBC expenses to get off-the-books cash kickbacks. Stewart and Burroughs ultimately underpaid their personal and company taxes by a combined amount of over $1 million.
In 2018 and 2019, a confidential informant (CI) working with law enforcement met with Stewart on multiple occasions, helping to reveal how the conspiracy worked. Over several meetings, the CI provided Stewart large amounts of cash in exchange for WBC checks for the same or similar amounts; Stewart and Burroughs would then divide the cash and keep it as income, while using the WBC checks to make it look like that money had instead been spent on company expenses to decrease their tax burden. In 2019 an undercover special agent (UC) joined the CI for similar meetings with Stewart and Burroughs. Stewart and Burroughs continued the cash-for-checks scheme despite being told that the cash was coming from interstate marijuana sales, including one transaction of over $150,000 that they falsely disguised as the purchase of a baler, complete with a fake invoice. The CI and UC ultimately exchanged hundreds of thousands of dollars in cash for WBC checks. For 2019 alone, Stewart and Burroughs were seeking to evade paying taxes on approximately $4 million.
As part of the conspiracy, Stewart and Burroughs caused false WBC company tax returns to be filed with the IRS for tax years 2016–2019, as well as false personal tax returns for themselves for those same tax years. In total, Stewart and Burroughs underpaid their personal and company taxes by a combined amount of $1,099,327.
This case is the product of an investigation by the IRS Criminal Investigation with assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Assistant U.S. Attorney Justin Lee is prosecuting the case.
Stewart and Burroughs are scheduled to be sentenced by U.S. District Judge Daniel J. Calabretta on May 9, 2024. Stewart and Burroughs each face a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
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