TRAVERSE CITY — A Bellaire movie theater owner will spend a year in prison for failing to report income that should have required her to pay nearly $1 million in taxes.
Elaine Dawson’s attorney said her business, which encompasses five cinemas in northern lower Michigan, “will survive” after a U.S. District Court judge this week ordered Dawson, 69, to pay $988,366 in restitution to the Internal Revenue Service. She was sentenced for evading corporate and personal income taxes between 2004 and 2010.
Court documents indicate restitution has already been paid.
Dawson pleaded guilty in October and also will spend a year on supervised release after her prison sentence ends.
Dawson and her husband purchased the Bellaire Theater in 1979. They also own cinemas in Petoskey, Gaylord, Mackinaw City and Cheboygan.
Dawson routinely under-reported the number of patrons who purchased movie tickets and under-reported receipts from concession and gift certificate sales, court documents show. She skimmed the cash for personal use, according to the Department of Justice.
”A fair amount of it went to buying her lake house,” said Assistant U.S. Attorney Nils Kessler, who prosecuted the case.
Dawson’s attorney, Larry Willey, contended the diverted money was “basically put back into the business” so her children could inherit the business debt-free. He said the lake home was built before she began evading taxes.
”She’s worked her whole life. She did something wrong here, but I think it’s kind of irresponsible to be claiming that everything she has is infected with that because it’s not true,” Willey said.
In a letter to the judge, Dawson wrote she takes full responsibility and was in a “horrible situation of not knowing how to handle our personal tax situation, or owing a large amount of money to the IRS every year.”
”It’s important to me that we can continue with our family theater business,” Dawson wrote.
The Mackinaw City theater and a home on Lake Bellaire are listed for sale, she wrote, and she will sell other theaters if necessary.
Dawson remains free and will be allowed to surrender to authorities to serve her sentence, Kessler said.