Couple Accused in Sales Tax Fraud That May Be Biggest in State History

The former owners of a chain of Los Angeles County gas stations were charged Wednesday with under-reporting their gross sales by $34 million in what authorities said may be the largest sales tax fraud of its kind since the tax was first imposed more than half a century ago.

Charles Nathan Shooster, 55, and his wife Sonya Merle Shooster, 41, of Beverly Hills, owe the state a total of $3.3 million in taxes, interest and penalties for unreported sales at their 17 Sunny Gas and Good Cent Gas stations from April 1, 1983, to June 30, 1985, City Atty. James K. Hahn told reporters.

The Shooster case represents the first prosecution under a new pilot program designed to catch sales tax evaders, Board of Equalization member Conway H. Collis said at a news conference to announce the charges.

“Because of the large amount of cheating by gas stations in California . . . the board instituted a specific program to identify those stations that were cheating,” Collis said, adding that the high incidence of evasion was first brought to the board’s attention by “honest” station owners. The state expects to collect $150 million during the program’s first year, he said.

Hahn said the Shoosters face a jail sentence of 10 1/2 years and a fine of $62,000 if convicted of all 22 misdemeanor counts alleging violations of four sections of the California Revenue and Taxation Code.

The couple, who have not been arrested, are expected to appear voluntarily at their Aug. 21 arraignment in Los Angeles Municipal Court, the city attorney said.

Hahn said the under-reporting was discovered during an audit the state Board of Equalization conducted of seven companies that supplied gasoline to the Shoosters’ chain over the past five years.

The Shoosters’ stations were located in the San Fernando Valley, the Hollywood area, Pico Rivera, South Gate and Pomona. Officials said all but two were sold late last year.

John Meade, a spokesman for Collis, said the Shoosters’ reporting of “sales per station (was) one of the lowest in the area.”

“They weren’t very sophisticat ed about it,” Meade said. “They just had a long-term habit of under-reporting.”

Noting that the state offered a 90-day sales tax amnesty program early last year, Collis said, “If the Shoosters had listened to us at that time, they would have saved themselves criminal prosecution plus $1.5 million in penalties.”

Collis said the state will attempt to recover $8.2 million in taxes, penalties and interest owed by the Shoosters since 1980, even though the couple have filed for bankruptcy. He explained that the criminal case involves a smaller amount because the statute of limitations on the rest has run out.