Ashland man gets 7 years in prison

Ashland man gets 7 years in prison

A former Ashland restaurant owner was sentenced in a Florida federal court Monday to seven years in prison for his part in a tax and debt elimination scheme.

Eugene "Gino" Casternovia, 62, was one of three men sentenced in federal court in Pensacola for helping people set up sham businesses to avoid taxes.

He had faced a possible 25-year prison sentence and $750,000 in fines for his role in a complicated scheme involving tax fraud, wire fraud and money laundering, attorneys for the U.S. Department of Justice and Internal Revenue Service said.

"There are consequences for disobeying the laws of our nation," said Victor S.O. Song, chief of IRS criminal investigation, in a press release. "These defendants are now being held accountable for their criminal behavior."

Williams resident Mark Lyon, who previously pleaded guilty, was sentenced to 18 months in prison. As part of a plea agreement, Lyon cooperated with the government and testified at trial against Casternovia and six others.

U.S. District Judge Margaret C. Rodgers set aside a jury verdict against another Ashland man, Robert Pendell, who was a former employee of Casternovia's. He was acquitted on all counts.

Casternovia was arrested in August 2008. He and his wife, Kathryn, have lived in Ashland for more than 25 years and once owned the now-defunct Northlight vegetarian restaurant and the Rainforest Cafe.

Kathryn Casternovia has not returned calls to the Mail Tribune.

On March 31, a federal jury returned guilty verdicts against eight people following a month-long trial in Pensacola involving the promotion of fraudulent schemes through a company known as Pinnacle Quest International, PQI or Quest International.

The government determined that Casternovia and others presented and sold tax-fraud schemes at trade shows and conferences around the world, including a presentation for 400 people aboard a cruise ship in the Mediterranean in May 2007.

Some of the PQI vendors, including Casternovia's Southern Oregon Resource Center for Education, or SORCE, sold bogus theories and strategies for tax evasion, the government said. For fees starting at $10,000, prosecutors said, SORCE assisted clients in the creation of a series of sham business entities in the United States and Panama.

In Casternovia's pre-sentencing hearing on Sept. 16, he said he "sold very few PQI memberships, as established through the testimony of Mark Lyon, and was never part of the PQI leadership."

PQI's most successful scheme was called Financial Solutions. Financial Solutions charged its customers thousands of dollars for a series of letters to send to credit card companies disputing the lawfulness of the underlying debt. The product was ineffective, and customers typically were sued by creditors and often forced into bankruptcy, prosecutors said.

Prosecutors said none of the defendants filed tax returns while they were involved in the PQI conspiracy. Two of the defendants, Claudia and Mark Hirmer, of Niceville, Fla., were convicted for evading the payment of more than $2 million in income taxes, penalties and interest for years 1996 through 2001.

Casternovia was listed in court documents as the "third most culpable defendant" of the group that was tried — behind the Florida couple, who are slated to be sentenced in October.

A Washington man, Arthur Merino, also was sentenced Monday to three years and four months in prison. Four others were sentenced in July to prison terms ranging from 5 to 12 years.

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