Nov 16, 2018 2 min read

East Washington resident George Retos Jr. remains free on bond after entering guilty pleas Friday in U.S. District Court in Pittsburgh to charges of conspiracy to defraud the Internal Revenue Service and making a false declaration of bankruptcy.

Retos, 70, pleaded guilty before United States District Judge Arthur J. Schwab.

In connection with the guilty plea, Retos admitted to agreeing with another individual to defraud the IRS by failing to pay over to the IRS payroll and employer taxes of Prime Plastics Inc. and Plastic Power Inc., two companies in Washington which the prosecution said Retos controlled.

To avoid ongoing collection efforts by the IRS related to unpaid taxes of Prime Plastics Inc., Retos and a co-conspirator, which the government did not name in a news release, arranged for employees of Prime Plastics to be transferred to Plastic Power Inc., which, in turn, also failed to pay employer and payroll taxes to the IRS.

The unpaid employer and payroll taxes totaled more than $250,000.

At Retos’ direction, the government alleged, Prime Plastics filed for bankruptcy and, in court filings, stated there had been no withdrawals from the entity outside the normal course of business during the preceding two years.

“In fact, Retos was responsible for numerous such expenditures, including thousands of dollars belonging to Prime Plastics Inc., spent by Retos at casinos in Las Vegas, Nev., and elsewhere,” the government alleged.

Retos also accepted responsibility for a charge of wire fraud as part of a scheme to fraudulently obtain unemployment compensation from Pennsylvania for employees of Prime Plastics, Inc., and later, employees of Plastic Power.

Retos reduced the salaries of numerous employees and instructed them to seek unemployment compensation from the state while knowing the employees were ineligible, according to federal prosecutors.

The government accused Retos, while executing the scheme, of siphoning company funds for his personal benefit.

The judge ordered a pre-sentence investigation be conducted and scheduled sentencing for March.

Prosecuting the case on behalf of the government were Assistant U.S. Attorneys Mary McKeen Houghton and Eric G. Olshan. The FBI, Department of Labor, Office of the Inspector General and the IRS investigated the circumstances.

Representing Retos was attorney Stephen Stallings of Pittsburgh.