Ex-president, employee of H/A Industries sentenced for failing to report income
They spent thousands on kids’ college tuition and high-end purchases
The former president and a former employee of a Sterling Heights manufacturing company were sentenced Thursday for failing to report about $3.3 million in income to the Internal Revenue Service and using the cash to enrich themselves.
Gordon J. Pesola, 60, of Oakland Township, the exhead of H/A Industries on Gatewood Drive in Sterling Heights, was ordered by U.S. District Judge Stephen J. Murphy III to serve 21 months in prison, according to the U.S. Attorney’s Office.
His accomplice, Kenneth R. Sanborn, 78, of Grosse Pointe Park, was sentenced to one year of home confinement. Both men were also ordered to pay a $10,000 fine and make restitution to the IRS in the amount of $1 million.
According to court records, the pair were indicted by a federal grand jury in 2019 on charges of conspiracy to defraud the government.
From 2009 through 2013, Pesola transferred H/A Industries funds to himself, Sanborn, and a third conspirator through the use of shell companies, most of which were established in the British Virgin Islands, court records show.
By using the shell companies, investigators said, the two were able to make the transfer of the funds appear to be payments by H/A Industries to its suppliers and contractors when in fact they used the funds to benefit themselves and their families.
Neither man reported the income on their federal income tax returns. The total income not reported to the IRS by the Pesola, Sanborn, and the third conspirator was approximately $3,375,000. The income tax loss to the government was approximately $1,004,000, records show.
The third conspirator passed away in 2015.
Court records show Pesola used the money he took from H/A Industries to buy a number of things, mostly jewelry, art, wine, vacation timeshares and collectible cars. He also purchased a $235,000 condo in downtown Chicago.
Prosecutors said he sent $8,000 to DePaul University and $15,700 to Columbia College Chicago for his daughter’s tuition; he purchased numerous expensive pieces of jewelry and other high-end items from stores on St. Thomas in the U.S. Virgin Islands; expensive wine; and vacation timeshares at locations in the Caribbean and Hawaii.
Court documents show Sanborn sent $77,000 to Washington University in St. Louis for his daughter’s tuition and about $70,000 to the University of South Carolina for his son’s tuition; $19,400 to his daughter’s off-campus housing landlords in St. Louis; $31,500 directly to his daughter and $18,000 directly to his son; and purchased merchandise at local merchants like Edmund T. Ahee Jewelers, Neiman Marcus, Best Buy and Mike on Mack Auto Repair.