BOSTON — West Lynn Creamery, Inc., one of the many dairy businesses owned by Dallas-based Suiza Foods Corp., has pled guilty in U.S. District Court to a tax scheme that will cost its parent $7.2 million.
According to reports, the fine is the largest criminal tax fine in New England history.
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West Lynn Creamery admitted to running a false invoice scheme for about five years, ultimately resulting in its under-reporting income to the Internal Revenue Service. The scheme involved its offering Dunkin’ Donuts franchisees and other customers dairy products at inflated prices, then paying out rebates that were not reported as income by the customers.
West Lynn Creamery pled guilty to one count of conspiracy to impede the collection of taxes by the I.R.S. The business paid out some $14.2 million in rebates to mostly small-business customers between December 1992 and December 1997. The customers did not report the rebates as income, resulting in a loss of about $4 million in uncollected taxes, reports said.
Suiza had announced a settlement agreement with the U.S. Attorney for the District Court of Massachusetts in April, under which the company would enter its guilty plea. In announcing the settlement agreement, Suiza stated it did not own the dairy business at the time the rebate scheme occurred. Suiza also stated that it would seek recourse for its shareholders from West Lynn’s former owners.
Suiza Foods bought West Lynn Creamery in 1998. The corporation also owns the assets of the fluid dairy division of Canton, Mass.-based Cumberland Farms.
