sunseeker yacht tax evasion

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Lakewood man writes off expenses, including use of yacht and luxury world travel, to underreport income by $2 million

A Lakewood man was charged in federal court for taking improper write-offs and not reporting more than $2 million in taxable income, said Carole S. Rendon, Acting United States Attorney for the Northern District of Ohio, and Kathy Enstrom, Special Agent in Charge, IRS Criminal Investigation, Cincinnati Field Office.

Thomas G. Klocker, 47, was charged via criminal information with four counts of tax evasion. The counts cover the tax years 2007 through 2010.

“Nobody likes paying taxes, but we all have to pay our fair share, which includes being honest about deductions and expenses,” Rendon said. “Those who underreport their income and take improper deductions will be held accountable.”

“As this tax filling season comes to a close, we are reminded of our collective duty to accurately file and pay our taxes,” Enstrom said. “Those who willfully abscond from this duty will be pursued and brought to justice.”

Klocker was the sole shareholder and operator of All Metal Sales (AMS) in Westlake. He also operated TT Charter Leasing, which was in the business of chartering the luxury yacht “Tommy Time”, according to the information.

Klocker diverted corporate funds from AMS for his own use to benefit his personal lifestyle and avoid personal income liabilities between 2007 and 2010, according to the information.

For example, Klocker diverted funds from AMS to construct a waterfront residence in Lakewood and to maintain his 68’ Sunseeker yacht, as well as to pay for luxury travel and to make cash withdrawals. He reported substantial business losses arising from the operating costs and expenses arising from the personal use of the TT Charter Leasing yacht, according to the information.

He also misrepresented his personal expenses entered into AMS’ books and records by falsely describing them as legitimate business expenses. Klocker also provided false information to his tax-return preparers about expenses he described as business-related which were, in fact, personal in nature – including luxury travel with his family, according to the information.

Klocker underreported his taxable income by more than $2 million during tax years 2007, 2008, 2009 and 2010. He owes at least an additional $611,000 in taxes for that period, according to the information.

If convicted, the defendant’s sentence will be determined by the court after review of factors unique to this case, including the defendant’s prior criminal record, if any, the defendant’s role in the offense and the characteristics of the violations.  In all cases, the sentence will not exceed the statutory maximum and, in most cases, it will be less than the maximum.

A charge is not evidence of guilt.  A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.

This case is being prosecuted by Assistant U.S. Attorney Robert J. Patton following an investigation by the Internal Revenue Service – Criminal Investigations, with assistance from the Federal Bureau of Investigation – Cleveland Field Office.

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Lakewood man who owned '68 yacht sentenced for tax fraud

LAKEWOOD, OH (WOIO) - A Lakewood man was sentenced to a six months behind bars and ordered to pay nearly $1.8 million restitution and fines for taking improper write-offs and not reporting taxable income.

Thomas G. Klocker, 47, was previously found guilty of four counts of tax evasion. In addition to jail time, U.S. District Judge James Gwin sentenced Klocker to six months of home confinement. Klocker was fined $500,000 and has paid nearly $1.3 million in restitution to the IRS.

"This defendant tried to take the government on a ride by claiming costs associated with cruises on his luxury yacht as business expenses," Rendon said. "Now he has to pay up, both financially and with his freedom."

Klocker was the sole shareholder and operator of All Metal Sales (AMS) in Westlake. He also operated TT Charter Leasing, which was in the business of chartering the luxury yacht "Tommy Time", according to court documents.

For example, between 2007 and 2010, Klocker diverted corporate funds from AMS for his own use. Prosecutors say he used the money from AMS to build a waterfront residence in Lakewood and to maintain his 68' Sunseeker yacht, as well as to pay for luxury travel and to make cash withdrawals.

He also misrepresented his personal expenses entered into AMS' books and records by falsely describing them as legitimate business expenses.

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Lakewood businessman sentenced to prison, fined $500,000 for tax evasion

• Updated: Aug. 16, 2016, 7:34 p.m.
• | Published: Aug. 16, 2016, 6:34 p.m.
• Eric Heisig, cleveland.com

Federalcourthouse.jpg

A Lakewood businessman was sentenced to prison Tuesday for tax evasion.

(Eric Heisig/cleveland.com)

CLEVELAND, Ohio -- A Lakewood businessman and yacht company owner was sentenced Tuesday to six months in federal prison and fined $500,000 for tax evasion, after an Internal Revenue Service investigation showed that he used money from his companies for lavish vacations and personal expenses .

Thomas G. Klocker will also have to spend six months on home detention, U.S. District Judge Gwin ordered. Klocker has already paid more than $1.2 million in restitution.

The judge told Klocker that it was a "very calculated effort you made the cheat the government of taxes."

Klocker, 47,  pleaded guilty in May to four counts of attempting to evade or defeat taxes.

Prosecutors said Klocker took money from All Metal Sales of Westlake between 2007 and 2010 and used it to pay for personal expenses. He did not report this money to the IRS and used some of the money to build a lavish lakefront home in Lakewood.

Klocker also lied to his tax preparers and said his family vacations were business trips. He also reported losses with TT Charter Leasing, which advertises the use of a 68-foot yacht named "Tommy Time."

He also did not report more than $2 million in income, on which he owed $611,673 in taxes. The diverted money was listed in his All Metal Sales' books as legitimate business expenses.

A couple dozen supporters filled the courtroom's viewing gallery. Among those were Cleveland safety director and former police Chief Michael McGrath.

Klocker apologized to the judge and his family on Tuesday.

"I've worked very hard to correct my actions, and I can promise you this will never happen again," Klocker said.

Richard Blake, Klocker's attorney, unsuccessfully argued that a sentence of probation would be more suitable. He said the shame of being convicted of a felony and having to face the public is more of a punishment than prison, where "you relax with a bunch of other felons there."

He also said that Klocker has done a lot of good for the community, and given boat rides to celebrities such as Katy Perry. The singer and her entourage were on his yacht in 2011, when she was in Cleveland for a concert .

The Cleveland Police Foundation named Klocker as its man of the year for 2015.

If you would like to comment on this story, please visit Tuesday's crime and courts comments section .

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M&A: British Luxury Yacht Manufacture SUNSEEKER to be acquired by US Lionheart Capital

The Chinese conglomerate, Wanda Group, in a bid to overcome debt, has reportedly agreed to sell the British yacht builder to the US investment firm in a multi-million dollar deal.

Wanda Group, the majority owner of Sunseeker International since 2013, has agreed to sell the Poole-based yacht builder to Miami-based investment firm Lionheart Capital, according to Bloomberg. The news agency stated that “according to people with knowledge of the matter”, Wanda Group and Lionheart had signed a sale-and-purchase agreement. The transaction could close as early as May 2024, depending on British regulatory approval.

Sunseeker has declined to comment on the situation. Last year, Sunseeker CEO Andrea Frabetti announced that the yacht builder had a retail forward order value of GDP 625 million, signalling a continued recovery following a downturn in 2020 due to the pandemic.

Read More: Sunseeker, Sanlorenzo Building Up to Boot Dusseldorf

Led by founder and CEO Ophir Sternberg, Lionheart is a diversified investment firm focused on “value growth investments”. Lionheart has a wide-ranging portfolio including ventures into private and publicly traded companies, retail and commerce, residential and hospitality, having backed companies including restaurant chain BurgerFi International, reimbursement specialist MSP Recovery and technology company SMX (Security Matters). In 2021, the firm was part of a group that bought US powerboat maker  Cigarette Racing, which recently launched its Middle East operation .

In 2013, Wanda Group, China’s largest shopping centre operator, reportedly acquired nearly 92 percent of Sunseeker for GDP 320 million. According to Bloomberg “Wanda Chairman Wang Jianling said then that the investment was driven by growth in China’s consumption of high-end luxury products that was ‘exponential’.” However, the conglomerate has increasingly come under pressure after borrowing costs surged and Beijing continues to crack down on the property sector, Bloomberg reported.

In early December 2023, Wanda Group was divesting core businesses, including its commercial facility management and movie divisions, to avoid bankruptcy. In January of this year, the Group was selling assets such as the 193-room Shanghai Wanda Reign luxury hotel, situated in Shanghai’s famed Bund district for an undisclosed sum. According to reports, sources indicate that the transaction was valued between an estimated 1.44 billion and 1.66 billion yuan (USD 204 million and USD 234 million). As The Wire China reports, the “reign” of China’s former richest man Dalian Wanda could be coming to an end as Wanda Group enters a “selling spree” in a bid to overcome debt and a low cash flow.

Read More: Exciting Debuts Await at the Singapore Yachting Festival 2024!

Led by CEO Andrea Frabetti, Sunseeker was founded in 1969 in Poole on England’s south coast by brothers John and Robert Braithwaite. Sunseeker yachts were prominently featured vessels in the James Bond films Casino Royale , Quantum of Solace and Die Another Day .

www.sunseeker.com

This article was first seen on YachtStyle.co .

For more on the latest in yachting news,  click here .

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Scottsdale man convicted of tax evasion

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Date: September 29, 2022

Contact:  [email protected]

Last week, Ryan C. Patterson, of Scottsdale, Arizona, was found guilty by a federal jury on three counts of Tax Evasion. Sentencing is scheduled for December 5, 2022, before United States District Judge John J. Tuchi.

Patterson, a contractor specializing in remodels, failed to accurately report his income between calendar years 2014 and 2016. He received checks from customers made out to him personally and then deposited the checks into his personal checking accounts. He also received payments in cash from customers that he failed to report. At trial, the government introduced evidence that Patterson failed to report over $1.9 million in gross income and avoided paying a combined total of $700,000 in taxes due over the span of the three charged tax years.

The evidence at trial revealed that Patterson reported a loss of $38,000 in 2016 despite, in the same year, purchasing a primary residence for $445,000 along with other lavish expenditures.

"The American tax system provides government services critical to our residents," said U.S. Attorney Gary Restaino. "Every time someone cheats the tax system, the burden of providing vital services increases for taxpayers who pay their fair share. The jury's verdict has sent a clear message that tax cheats will not be tolerated."

Internal Revenue Service - Criminal Investigation conducted the investigation in this case. Assistant U.S. Attorneys Kevin M. Rapp and Aron Ketchel, District of Arizona, Phoenix, handled the prosecution.

DOJ: Local man tried to write off yacht on taxes

A Lakewood man is facing federal charges for allegedly writing off luxury expenses and not reporting more than $2 million in taxable income. 

According to the Department of Justice, 47-year-old Thomas Klocker was charged with four counts of tax evasion involving incidents from 2007 to 2010.

Authorities say Klocker was the sole shareholder and operator of All Metal Sales in Westlake. He also operated TT Charter Leasing, which was in the business of chartering the luxury yacht “Tommy Time."

Klocker allegedly diverted funds from All Metal Sales for his own personal use. 

Fore example, the Department of Justice alleges that Klocker diverted funds to construct a waterfront home in Lakewood and to maintain his 68-foot Sunseeker yacht. 

Officials say Klocker also owes at least $611,000 in taxes after underreporting his taxable income by more than $2 million in 2007, 2008, 2009 and 2010.

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cleanslate Senior Member

Time to change the boot stripe to "money seeker".... Or just good old "S.O.L."

Capt J Senior Member

olderboater said: ↑ And they don't agree on those numbers and it actually includes many more boats because of Obey trying to offset warranty work on other boats against the purchase of these. Click to expand...

RER Senior Member

I would think Turner's lawyers will first try to get Sunseeker UK in court in FL which they may or may not be able to do. I think they will try to show a pattern, and it appears there may be one, of Sunseeker building boats for Obey's clients with financial transactions that do not follow the contracts. That's probably Turner's shot at Sunseeker which is key because they have possession of the boat. But if he can't get them in on the lawsuit then he's left with going after Obey for the money and I doubt that a judgement against Obey is going to bring any satisfaction.

olderboater Senior Member

Turner had no contract with Sunseeker. He was buying a boat from Obey, to be built by Sunseeker International, delivered to Sunseeker US and delivered to Obey, but the only two parties to the contract were Turner and Obey. I doubt seriously that contract indicates what had to be done with the money and the trade in, just here's the trade, here's what is paid and what is due and when. The boat in question, Obey doesn't own and never owned as he, the purchaser from Sunseeker, never paid for it. As to warranty work and offsets and what and when and how he was supposed to pay Sunseeker, we have seen glimpses of the agreement but not the specific orders. As to legal on applying warranty work, unless their agreement specifies, he could apply it like a payment. However, that only works if they honor his claim. Clearly he wasn't segregating funds and was applying what was received on one boat to another. It's something done by many builders and I think fits the broad definition of a Ponzi scheme. Now, he ended up with some large amount of what he owed Sunseeker tied up on used boats, also. Just applying the money received would never pay for the boats. Theoretically, he'd buy their boats and apply that money, but I doubt seriously that happened. Ultimately, Turner didn't have protection against dishonesty or manipulation or anything other than everyone following through like they should have. Neither did others. Had everyone done as they were supposed to, he would have been fine, like many buyers all these years. He trusted who he was dealing with. I wouldn't be at all surprised if he signed a contract without an attorney reviewing it and paid the money. I will say this too. Turner is actually better off if Sunseeker disposed of the boat which might mitigate some damages. Otherwise, even if he wins at some point, he has an old boat. Money is what he'll be seeking to recover. Let's assume he isn't successful recovering money from Obey. He might possibly be able to recover money he gave Obey, which Obey passed on to Sunseeker. Furthermore, if Obey sold his old boat, then he can try to follow it. It's way too convoluted to know all the possibilities. I would be trying to pursue it as a conspiracy also, trying to pull Sunseeker into it. That requires finding out what they knew, which requires a lot of depositions.

I was referring to the dealer contract between Obey and Sunseeker. Not Turner and Obey.

RER said: ↑ I was referring to the dealer contract between Obey and Sunseeker. Not Turner and Obey. Click to expand...

Yes that's essentially what I was thinking.

RER said: ↑ Yes that's essentially what I was thinking. Click to expand...

And I still say Sunseeker looks really bad even if they end up off the hook legally. Good point about the money Sunseeker received on that boat. Seems that at least some of it should go back to Turner.

Capt Ralph Senior Member

RER said: ↑ And I still say Sunseeker looks really bad even if they end up off the hook legally. Good point about the money Sunseeker received on that boat. Seems that at least some of it should go back to Turner. Click to expand...

Capt Ralph said: ↑ No money can go back to Turner from Sunseeker Intl. That would be an admission of guilt. The money (after factory damages) would go back to the company that sent it in. That brings in a point; If the company that sent the money in is no longer in business, the guilty (US Side) person or company has to maneuver to take delivery of it. Possibly proving a guilt. Click to expand...

olderboater said: ↑ Assuming Obey and his customers are due some money back on amounts they paid for boats they didn't receive and assuming it's not near all they paid, only the courts can determine how it's split among debtors. Click to expand...

I believe Sunseeker just cancelled the orders for non payment and is holding the boats or shipping to new dealers. I heard one buyer was saying he'd pay what was still owed including any Obey shortfall, but I don't think Sunseeker felt they could legally do that. They can't give a buyer credit for what Obey paid them. That would be them diverting the funds.

Oscarvan Senior Member

olderboater said: ↑ They can't give a buyer credit for what Obey paid them. That would be them diverting the funds. Click to expand...

Although the complaint is shorter than Turner's, I find the arguments in Velvet Beach's suit to be much more compelling. They claim that Sunseeker USA is simply an alter ego for Sunseeker International and, therefore, Sunseeker International is subject to suit in Florida. Same officers and represented by same people. Well presented. They claim that Sunseeker regularly told Obey to apply warranty claims against boat purchases. I have no idea if that's true. They claim that Sunseeker was actively involved in the reallocation of funds. Their contract provided for pre-inspection and delivery in the UK. And here's a big one. It's a "Revenue Recognition" letter that Obey signed for Sunseeker claiming to be in possession of vessels so Sunseeker could recognize the revenues in a given year even though the revenues had not yet been earned. Also, customer deposits were allocated to spec vessels so those sales could "close." On top of fraud, they add in fraud in the inducement. This includes neither party informing the buyer of the litigation and meanwhile the buyers $455k deposit and a total of $4 million US in deposits by customers just being ignored. (Note the suit by Sunseeker of Obey is 13.5 million GBP. JPC Sea Holdings has an interesting case, much a reminder of Northern Marine. In this case they paid 20% down, $690k. They got an email saying the next 30% was due when the hull was laid up. However, for three months they attempted to discuss the status and requested evidence of the completed hull so they could then make payment. They never received any evidence and Obey declared they had breached the agreement and the purchase contract was no longer valid and they'd keep the $690k as liquidated damages. Prior to the claim that JPC had breached the contract, Obey and his counsel had told them the delay was due to a disagreement between Obey and Sunseeker and that Sunseeker was threatening to discontinue production of the yacht and terminate their agreement with Obey. They claim that Obey kept the deposit and tried to get the additional 30% even though he knew the boat wasn't being built. This delivery was also to be in the UK. What is also interesting is that in 2016, the same buyer had purchased a 65' Manhattan through Obey and throughout the build gotten evidence from Obey of stage of completion and paid accordingly.

Oscarvan said: ↑ But they can be sitting on the funds Obey paid them and not deliver anything for them? Smells of having your cake and eating it too.... eventually the courts will, or should, have something to say about that one would think. Click to expand...

Oscarvan said: ↑ But they can be sitting on the funds Obey paid them and not deliver anything for them? . Click to expand...

Scott W Senior Member

After reading through most of the court filings, it wouldn't surprise me at all if federal and state tax and law enforcement authorities had already opened up investigations. These aren't small dollar amounts in question. There is ample evidence that points to potentially fraudulent behavior and most of that behavior, in addition to being itself criminal, also increases the likelihood of accounting irregularities. Those irregularities are also likely to have tax implications. All this underscores how little in the way of consumer protections are in place for boat buyers. But, the boat lobby is strong in FL and other states and the consumer lobby, not so much. So, here we are. My advice to friends looking to purchase any boat, new or used is simply: If you're not willing to put those funds in a hole in the backyard, douse it with gas and set it ablaze, always secure the services of a qualified, experienced lawyer before signing anything, particularly a check. Handshakes are for dinner parties. Carefully considered and executed written contracts are for business.

German Yachting Senior Member

I’m curious if they will be able to go after Obey himself or any holders of the new company. There are instances of being able to go after the owner/successor company of a failed business when the original LLC wasn’t sufficiently capitalized and therefore isn’t a distinct business from the owners themselves.

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What are the tax implications for superyacht owners?

Tax and customs authorities throughout Europe, and further afield, have universally declared war on clever tax avoidance structures. Most recently, the G20 in Russia have set themselves the goal of neutralising the ability of tax payers to avoid paying tax where it is due. Arbitraging one set of national tax rules against another set will be stopped.

Layered upon this is a political imperative which has created an atmosphere that taints tax avoidance with moral repugnancy. The G8 summit in June cast aggressive tax planning as immoral. To avoid taxes which, if a person were transparent in their business affairs they would, as a matter of course, pay, but they do not because of an opaque organisation of their affairs, is not a good thing.

If structures are layered with complex inter company relationships, no matter who signs it off as ‘technically legal’, be sure that if there is no objective commercial rationale for the structure, it will be open to question. The tax will be demand and there will be no option of being differently tax efficient.

Buoyed by support from the European Court of Justice, the EU tax authorities see themselves as Julius Caesar and they have crossed the Rubicon, which distinguished evasion and avoidance and are set to defeat those, like Pompey, who represent the old ways. There are also renewed vigorous policy bombardments against offshore centres. Not yet, but given that now to charter in Europe you must register for VAT in centre from whenst you commence charters and must have a fiscal representative in that jurisdiction, it will not take long before the obligation for VAT registration will extend to registration for corporation tax and thus bringing all superyacht business onshore.

Whether this is a good or bad thing is not for me to say, but suffice it to say it would require a global shift in policy to reverse this trend. Let us not forget, this is not a concerted attack on superyachts. We are a fleet of approximately 5,000 vessels caught in the cross fire of the publicity brought about by Starbucks and Amazon’s tax affairs.

this is not a concerted attack on superyachts. We are a fleet of approximately 5,000 vessels caught in the cross fire of the publicity brought about by Starbucks and Amazon’s tax affairs.

The most recent superyacht skirmish saw the defeat of the French Commercial Exemption at the European Court of Justice. France has withdrawn its blatant flouting of the Sixth Directive and she has fallen into line, almost, with the rest of the EU, by declaring that VAT will be charged on charters commencing or ending in France.

There are commentators and local advocates of superyacht industry in France who claim that the effective rate of VAT will not be 19.6 per cent but less than 10 per cent on the grounds that only that portion that is inside French territorial waters will be subject to VAT.

If less than 19.6 per cent is collected by an owner for the French state, how will another EU customs authority respond? Is this a distortion of the EU superyacht charter market? Will France be forced to collect the full 19.6 per cent unless you can conclusively prove the charter was outside France? My guess is that eventually the assumption will be made that 19.6 per cent must be collected, thus requiring the superyacht owner to make an almost impossible case to reduce the VAT.

We are not there yet, but as VAT falls upon the owner to collect, will owners risk not collecting the full 19.6 per cent in the hope that the French authorities do not attempt to claw it back later? A very difficult commercial judgement call and an impossible legal conundrum.

John Leonida, a former Foreign and Commonwealth Office economist, heads up Clyde & Co’s superyacht practice. A leading commentator on superyachting matters, he and his team advise several of the leading yacht builders, owners and designers. Leonidas’s team has been involved in many of the recent leading cases involving the superyacht world. In a new monthly column for Boatinternational.com, Leonida will lend his expert insight on legal issues affecting the superyacht owners.

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