For the Tomahawk Leader
MADISON – Timothy M. O’Shea, United States Attorney for the Western District of Wisconsin, this week announced that a Merrill man had received a nearly three-year prison sentence for a federal tax crime.
On Tuesday, Feb. 21, Kevin Shibilski, 61, was sentenced by Chief U.S. District Judge James D. Peterson to 33 months in federal prison, followed by three years of supervised release, for failure to pay $858,101.00 in employment taxes to the IRS for tax years 2014-2016.
Shibilski represented Wisconsin’s 24th Senate District from 1995 to 2002. He led an unsuccessful Democratic primary campaign for lieutenant governor in 2002, and later served as state tourism secretary under Governor Jim Doyle.
On May 16, 2022, Shibilski pleaded guilty to failing to pay over employment taxes to the IRS from Pure Extractions Inc. and Wisconsin Logistics Solutions LLC.
According to a release from O’Shea’s office, Shibilski was a minority owner and CEO/CFO of 5R Processors (5R), which had locations in Ladysmith, Catawba and Glen Flora, Wis., and Morristown, Tenn.
“5R was involved in the recycling of electronic equipment and other assets,” the release stated. “Pure Extractions Inc. (Pure Extractions) was created by Shibilski in June 2014 to handle 5R’s recycling operations. Pure Extractions took on all of 5R’s recycling customers, warehouses and equipment, income flows from recycling, most of 5R’s recycling employees, but none of 5R’s debts.”
The release said Shibilski created Wisconsin Logistics Solutions LLC (Wisconsin Logistics) in Feb. 2015 to handle 5R’s trucking and logistics operations.
“Wisconsin Logistics took on most of 5R’s trucks and equipment, drivers, dispatchers, pick-up routes, licenses and all of 5R’s income flows from trucking and logistics, but again, none of 5R’s debts,” the release stated.
At this week’s sentencing, Judge Peterson found that the government “presented overwhelming evidence showing that Shibilski had been in charge of 5R’s operations and finances since March 2013, and had been the primary decisionmaker on which bills to pay and not pay, including not paying the employment taxes for 5R, Pure Extractions and Wisconsin Logistics.”
The release said Peterson found that Shibilski “had not sincerely accepted responsibility for his actions, noting that Shibilski kept blaming everybody else, including the IRS, his co-defendants, and other 5R employees for the nonpayment of the employment taxes.”
“Judge Peterson added that as the CEO/CFO and part-owner of 5R, Shibilski was the person who was in charge at 5R, which had a brother-sister relationship with Pure Extractions and Wisconsin Logistics,” the release stated.
According to the release, Peterson explained that a sentence of imprisonment was “necessary in this case to send a deterrence message to two groups.”
“One, business owners who willfully fail to pay their employment taxes and need to know their actions will have consequences and they will go to federal prison,” the release said. “Two, the general public who need to know that prison is not just for the impoverished or drug dealers, and that people who willfully fail to pay the IRS and use the tax funds for other purposes will go to prison.”
As part of the plea agreement, Shibilski agreed to pay monies towards the remediation of the leaded glass storage sites for 5R in Wisconsin and Tennessee in the amount of $100,000.00 to the Wisconsin Department of Natural Resources (DNR); and $100,000.00 to Paint Oak LLC, Knoxville, Tenn.
Shibilski’s co-defendant, Bonnie Dennee, pleaded guilty to conspiracy to defraud the United States, relating to 5R’s illegal storage of leaded glass. On Jan. 26, 2021, Dennee was sentenced to five months in prison.
Shibilski’s co-defendant, James Moss, also pleaded guilty to conspiracy to defraud the United States relating to 5R’s illegal storage of leaded glass, as well as conspiracy involving the failure to pay over 5R’s employment taxes. Moss was sentenced to 18 months in prison on Nov. 23, 2020.
The charges against Shibilski, Moss, and Dennee were the result of an investigation conducted by the Wisconsin DNR, the Bureau of Law Enforcement, the United States Environmental Protection Agency, Criminal Investigation Division, and IRS Criminal Investigation.
The prosecution of the case has been handled by Assistant U.S. Attorney Daniel J. Graber.