Dial C for criminal.
A Florida businessman has been sentenced to a year-and-a-day in prison after spending 12 years evading having to pay nearly $11 million in fines he owed as the result of running a shady 1-800 telecom scheme.
Patrick Brian Hines, 71, of Ponte Vedra Beach, which is near Jacksonville, pleaded guilty in November to hiding his assets in the name of his wife and others while declaring bankruptcy to avoid satisfying the enormous fines he had been ordered to pay.
Federal prosecutors say while Hines claimed to be destitute, he continued to live high on the hog, paying for high-priced club memberships, personal-training sessions, private school tuition for his kids and making $275,000 in mortgage payments for a swank beach-front property.
In addition to the prison term, Hines was ordered to pay $1.9 million in penalties.
“For over a decade, Mr. Hines lied to the Internal Revenue Service, cheated the tax system, and stole from honest American taxpayers,” said Brian Payne, of the IRS’ criminal investigation unit.. “Mr. Hines’s attempts to conceal assets and income to evade taxes were unsuccessful and a tough lesson that came with significant consequences.”
A message left with Hines’ attorney wasn’t immediately returned.
According to court records, Hines ran a group of telecom companies from 2004 until 2011 which would acquire 1-800 numbers that had previously been used by other companies. When a customer of the older company would call the number, they would hear a recording saying that if they wanted more information they needed to call another number for the price of $4.99.
The scheme netted Hines millions in underhanded fees, investigators said.
That the recording never informed the caller that the number they thought they were reaching was actually defunct, led to a flurry of lawsuits and eventually landed Hines on the radar of the Federal Communications Commission and the California Public Utilities Commission.
Both agencies moved to shut him down and eventually levied millions of dollars in fines against him. In 2011, Hines shut his businesses down and declared bankruptcy. Over the next 12 years, he claimed to have no income aside from an allowance of $3,479 a month from his wife on his tax returns and insisted that he had no money to pay the fines.
But prosecutors say that in 2012, Hines established a new telecommunications company in his wife’s name and that over the next six years brought in $4 million in revenue. Hines continued to run the business, prosecutors said, but did it using a number of nominees to make it look like he wasn’t involved.
In court filings, Hines’ attorney admitted that his client had tried to make a new start after the collapse of his original company, using an idea of his wife’s by switching his 1-800 business from a directory assistance model to one that played ads to callers instead. But that business failed in 2018 and Hines now has little money left and had been in poor health, living in an apartment with his daughter.