By Shereen Siewert
A 55-year-old Wausau man who embezzled $1.7 million from his family’s lumber company will spend 30 months in federal prison for income tax evasion, according to a news release from the U.S. Dept. of Justice.
Leonard Kersten, who was indicted in July, was sentenced Friday by U.S. district Judge William M. Conley. Kersten, who embezzled the funds from a family-owned business over a 10-year span, will spend three years on extended supervision following his release from federal prison. He pleaded guilty to tax evasion charges in January.
According to federal documents, Kersten, who was a bookkeeper for the Birnamwood company, wrote more than $1.7 million in unauthorized checks to himself and his spouse and recorded them as payments to vendors. The checks were written over a 10-year span that ended in September 2017, when the scam was uncovered by company officials.
Kersten was terminated from his employment and filed for bankruptcy protection one month later.
Federal bankruptcy court documents show Kersten did not list any of the embezzled funds as income on his bankruptcy petition or on his income tax returns. In September 2018, a foreign judgement was filed in Marathon County Circuit Court against Kersten and his wife, Jamie Kersten, for $1,753,086.35. A foreign judgment is one that is entered in another jurisdiction, such as another county or state, and recorded in another county for enforcement purposes.
No criminal charges have been filed against Jamie Kersten, who is named a fourth-party defendant in a civil lawsuit filed by the Kersten Lumber Company in February 2019 against Leonard Kersten. That case remains unresolved as of April 13.
Under federal law, even embezzled funds are considered income for tax purposes. Kersten admitted at his guilty plea hearing that he knew the tax returns he filed were false because he knew the funds he embezzled were supposed to be included as income. By willingly failing to report the additional embezzled income on his tax returns, Kersten and his spouse paid approximately $350,000 less in taxes than they should have. This created a tax due and owing under federal tax law.
U.S. District Judge William M. Conley ordered Kersten to report to federal prison on May 24, 2021. He was also ordered to pay restitution of $347,979.96 to the Internal Revenue Service.
Federal documents show a judgment for the same amount was also filed months earlier in U.S. Bankruptcy Court for the Western District of Wisconsin, ensuring that the debt to Leonard Kersten’s employer was not dischargeable in the couple’s bankruptcy filing.
The charges against Leonard Kersten were the result of an investigation conducted by IRS Criminal Investigation. The prosecution of the case was handled by Assistant U.S. Attorney Meredith P. Duchemin.