This story was updated on 10/6/2016
An Aberdeen man, Willis D. “Bill” Lonn Jr., 68, was convicted Wednesday in federal court at Tacoma on nine counts of mail fraud, two counts of income tax evasion, one count of money laundering conspiracy and one count of interstate transportation of stolen property.
The jury deliberated about two hours before returning the guilty verdicts. U.S. District Judge Benjamin H. Settle scheduled sentencing for Jan. 9 of next year.
Lonn was a long-time manager for Long Beach Shavings Co., which is based in California, but has a plant in Hoquiam. He stole more than $1.3 million from a business owned by members of his family, the government said.
The company was owned by Lonn’s uncle and cousins. The Hoquiam plant processed wood shavings that are used on farms, at horse shows or in pet stores. He had worked at the Hoquiam plant for about a decade when he launched a scheme in the 2000s to steal and sell the wood shavings products, the government said.
He was accused of selling the shavings directly to customers in Washington and Oregon without turning the proceeds over to the company. Later, the government said, Lonn arranged to get wood chips for free from the Mary’s River lumber mill in Montesano, but he told the parent company that an entity named M & R Lumber needed to be paid for the wood shavings. Lonn created the phony company and posed as M & R Lumber, producing phony invoices to bill Long Beach Shavings for the material he was getting for free. Between the two schemes Lonn obtained more than $1.3 million from Long Beach Shavings, according to the government. He was terminated by the company in 2011.
According to briefs filed in the case, in 2010 Lonn was confronted by family members who figured out he was selling directly to customers and not reporting the sales. He agreed to repay $700,000 and was allowed to keep his job, but according to the government, he continued on with the fake invoice scheme.
Later that year, family members discovered he was charging the company for materials he was getting for free, the government said, and at that point he was fired, but opened a competing business in Elma, court records say.
Long Beach Shavings is owned by Jack Price, who is Lonn’s uncle, and Price’s three children, Chris Price, Marlene Wilson and Alison Vanderelst, who are Lonn’s cousins.
Hoquiam police handled the initial investigation and turned their findings over to federal investigators.
“The case originated with Hoquiam PD,” said Hoquiam Police Chief Jeff Myers. “Sgt Krohn spent hundreds of hours on this case, which encompassed several boxes of records and reports. We sought out assistance from federal investigators as the case was quite extensive and crossed state lines. We also realized the case would require a forensic accountant to track all the invoices, payments, transactions and checks. The U.S. Postal Inspector actively pursued the case and we appreciate that the federal prosecutor brought this case to justice.”
The U.S. Attorney’s office said testimony at trial revealed that in tax years 2009 and 2010, Lonn never paid income taxes on the money he received through the scheme. Had he reported it, his income tax bill for those years would have increased by more than $80,000, the government said.
The case was investigated by the U.S. Postal Inspection Service and the Internal Revenue Service Criminal Investigation.
Assistant United States Attorneys Brian D. Werner and Nicholas Manheim were the prosecutors in the case.
