Eugene R. “Trey” Britt III, who was part owner of former Statesboro bars Rude Rudy’s and Rum Runners, as well as bars and a restaurant in Tifton, Americus and Milledgeville, pleaded guilty to a single count of felony tax evasion Wednesday morning in federal court in Statesboro.
Britt, 52, from Milledgeville, has yet to be sentenced. But he signed a plea agreement with the U.S. Department of Justice in which he agrees to pay the Internal Revenue Service $362,249 in restitution. In reply to questions from Chief Judge J. Randal Hall of the U.S. District Court for the Southern District of Georgia, Britt acknowledged that amount and also said, “Yes, your honor,” to the government’s assertion that its loss resulting from his conduct totaled $535,772.
He and his brother, former Statesboro City Council member Will Britt, are among several central and southern Georgia businessmen accused of taking part in a scheme that federal prosecutors say disguised the true ownership of bars in college towns and skimmed cash into the pockets of the secret partners.
Will Britt, 48, pleaded guilty, also to a single count of tax evasion, in April and agreed to pay $352,404 in restitution. Hall then sentenced him in August to serve 33 months in federal prison, beginning Nov. 7.
Trey Britt appeared in the same courtroom, at the Prince H. Preston Federal Building, Wednesday, Oct. 19, before the same judge. Hall reviewed the contents of the “information,” a charging document filed by prosecutors, and Britt formally waived his right to insist on a grand jury indictment.
‘Low end’ request
For one count of tax evasion, federal law provides for a maximum sentence of five years in prison followed by three years of supervised release, plus a fine of up to $250,000, in addition to prosecution costs and any restitution.
Under the plea agreement, the prosecutors recommend that Britt be sentenced in “the low end of the advisory guidelines range,” in exchange for his continued, truthful cooperation.
But as a federal judge, Hall is not bound by that recommendation, as the agreement itself acknowledges. Wednesday, he ordered a pre-sentencing report to be prepared by the U.S. Probation Office and said he will schedule a sentencing hearing after receiving the final report.
Both the FBI and the IRS have been involved in the investigation. The charging document was signed first by U.S. Attorney David H. Estes of Georgia’s Southern District, headquartered in Savannah. But the Justice Department Tax Division’s Assistant Chief David Zisserson and Tax Division Trial Attorney Casey Smith negotiated the plea agreement, as the division’s prosecutors have been coming here from Washington, D.C., to conclude these cases.
Six named bars
The government alleged, and Trey Britt by his plea agreed, that he was part owner of BGRG Inc., which did business as the Capital City bar and 119 Chops restaurant in Milledgeville. “James Stafford was the sole owner on paper” but in practice, the business “had multiple partners, including the Defendant, who had varying ownership percentages,” the charging document states.
Meanwhile, Chrysha Inc., a corporation formed in April 2002, did business as Rum Runners, a bar in Statesboro. Again, “Stafford was the sole owner on paper” of Chrysha Inc., but it had multiple partners, who held varying percentages, including Britt. Rude Rudy’s, also a bar in Statesboro, was operated as a separate limited liability company, formed in January 2007 and owned “by Individual F,” but also really with multiple partners, including Britt.
Stafford, then 44, entered a guilty plea in March to a single tax evasion count but has yet to be sentenced.
Other bars of which Britt was a previously undisclosed part-owner included The Gin in Tifton and Dillinger’s in Americus.
“The true owners shared in the profits generated by the establishments by skimming cash and disbursing it to the true owners in accordance with their ownership percentage,” the charging document states. “The establishments then failed to report the skimmed cash as income on federal income tax returns filed with the IRS.”
Three bars in Valdosta named in Will Britt’s case were not included in the specific allegations against Trey Britt.
Target year
In each case, the federal prosecutors have hinged the specific charge on a single tax year – in Trey Britt’s case 2015 – but allege that the conduct was going on much longer.
“Mr. Britt stuck with this as his business structure for nearly two decades and consistently failed to report the cash receipts as income,” Smith, the Tax Division trial attorney, told Hall.
The charging document states that Britt provided “false information to Accountant A,” a certified public accountant in Sylvania, for preparing Britt’s IRS Form 1040 for tax year 2015. Britt failed to inform the accountant of cash distributions he received from Capital City, Chops, Rum Runners, Rude Rudy’s, The Gin and Dillinger’s, the document states.
While he received cash from all six establishments, he owned a majority interest in three – Capital City, Chops and Rum Runners – and disbursed cash to their true owners, including himself, the government asserted.
‘Music Festival’
Further, the prosecutors alleged, and Britt in effect agreed, that he failed to report money from a “beer sales operation” at a music festival, identified only as “Music Festival 1.” This allegation did not have a parallel in his brother’s case.
Beer sales for the music festival, also in 2015, were done on a cash-only basis, with the beer sales operators keeping 50% of the profits, the charging document asserts. Again, Trey Britt and others skimmed cash and disbursed it to themselves in accordance with shares, the government alleged.
According to the plea agreement, Britt reported his total income for 2015 as a loss of $127,290, while knowing that his “income for that year was substantially greater.” But the government based the $362,249 restitution total on unpaid taxes figured for six years, 2011-2016.
The $535,772 loss calculation was for sentencing guideline purposes and could include revenue the government claims its lost from other taxpayers as a result of his actions.
Britt was involved in past years in staging concert tours for country music star Luke Bryan, a Georgia Southern University graduate. In court Wednesday, Britt said that, in addition to being employed in rental house construction, he is again doing work for the Luke Bryan Farm Tour.
Free on bond
Hall let Britt remain free on a $30,000 unsecured bond to await sentencing, with certain conditions, among them that he must report to a probation officer. The judge generally restricted Britt’s travel to within Georgia. But his attorney, Murdoch Walker of Atlanta, stated that Britt’s employment could soon require travel to other states, including Florida, South Carolina and Tennessee.
Hall then said he would delegate decisions on work-related trips to the probation officer, provided that Britt inform the officer at least 48 hours in advance.
Approached after the hearing, Walker said his law firm does not comment on still unresolved cases.
“But we look forward, obviously, to the most equitable resolution,” he said.
A news release from the U.S. Attorney’s Office in Savannah quoted Estes, as well as an IRS investigator and an FBI lead agent in Atlanta.
“Tax evasion is not a victimless crime,” said James E. Dorsey, special agent in charge, IRS Criminal Investigation. “We all pay when others cheat our tax system. Tax evasion with this degree of trickery, dishonesty and deceit, did not go undetected. Today's plea demonstrates our collective efforts to enforce the law and ensure public trust in our tax system.”