Port Orchard theater owner pleads guilty to tax evasion

A Port Orchard woman pleaded guilty in U.S. District Court in Tacoma on Friday to charges she failed to pay tax on $197,000 in income earned at a drive-in theater she and her husband jointly owned.

Since 1986, Cindy Ondracek, 49, and her husband have owned and operated the three-screen Rodeo Drive-in movie theater in South Kitsap.

Between August 2002 and 2005, the couple opened and operated a second theater, Redwood Cinema, in Bremerton.

Ondracek admitted in court Friday that between 2002 and 2005, she failed to pay income tax from the theaters.

Ondracek faces up to five years in prison and a $250,000 fine, plus interest and penalties on the tax loss, when she is sentenced by U.S. District Judge Ronald B. Leighton on May 27, 2010.

According to the indictment and plea agreement, over a five-year period the movie theaters owned by Ondracek and her husband took in more than $2 million in gross receipts -- much of it in cash.

Ondracek structured the deposits into her bank account so that the cash deposits were under the $10,000 benchmark that generates reports to federal investigators.

Despite the large income, Ondracek and her husband failed to file income tax returns for those years.

As charged in the indictment, Cindy Ondracek’s share of the tax liability for those years was $68,000.

According to the plea agreement, both Cindy Ondracek and her husband Jack Ondracek provided information to their accountant and knew that they needed to file and pay income taxes, but it was Cindy Ondracek who attempted to shield the information on income from government regulators by structuring the cash deposits.

At one point their bank formally sent them a warning notifying them of the currency reporting rules.

In addition to the criminal penalties, Ondracek faces civil tax, penalties, and interest.

Ondracek is required to pay costs of prosecution.

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