Former Pagosa Springs man pleads guilty to tax fraud involving hot springs

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Former Pagosa Springs man pleads guilty to tax fraud involving hot springs

Bill Whittington failed to report funds directed to him from business

By Shane Benjamin Herald Staff Writer

Friday, May 4, 2018 6:20 PM

Updated: Friday, May 4, 2018 7:30 PM

A former resident of Pagosa Springs with connections to the Springs Resort & Spa has pleaded guilty to filing a false tax return.

William Marvin “Bill” Whittington, 68, of Scottsdale, Arizona, pleaded guilty Wednesday in U.S. District Court in Durango to filing a false 2010 individual income tax return, in which he underreported his income by more than $390,000.

From 2010 to 2012, Whittington directed the hot springs in Pagosa Springs, a business run by him and members of his family, to pay many of his personal expenses, according to a news release issued Friday by the U.S. Department of Justice. Whittington failed to report those funds in tax filings, and as a result, underreported his income by more than $900,000 and neglected to pay more than $360,000 in taxes, according to the release.

Whittington also used two offshore bank accounts from 2003 to 2010 in Liechtenstein to generate about $9.7 million in investment income, the release says. He did not pay taxes on that income, resulting in a tax loss of at least $1.5 million, according to the release. In total, Whittington did not pay at least $1.8 million in taxes owed to the IRS.

Sentencing is scheduled for Oct 9. In addition to a prison sentence, Whittington faces a period of supervised release, restitution and monetary penalties.

Whittington is the father of Nerissa and Keely Whittington, who own the spa and hot springs in Pagosa.

In a news release this week, Nerissa and Keely Whittington said they welcome the conclusion of the years-long federal investigation but expressed sadness that their father faces prison time.

Nerissa and Keely Whittington emphasized that the federal investigation resulted in no charges against them, and that Bill Whittington does not own and has never had any financial stake in the hot springs or a Bigbyte.cc, a data center they also own in Albuquerque.

Nerissa and Keely Whittington, who have operated the resort since 2004, have consistently said the criminal charges surrounding their father are regrettable but completely unrelated to their business, according to the release.

“This is a bittersweet day for our family, but this is also an opportunity for us to gain clarity and move on,” Nerissa and Keely Whittington said in the release. “A careful investigation by federal authorities ended with no criminal charges filed against us or our companies.”

shane@durangoherald.com

Whittington brothers leave a shadow on Indy 500

Bill Whittington and his brother Don and have the distinction of qualifying for the same Indianapolis 500, and of being two of four drivers convicted in marijuana smuggling cases that shook Indianapolis Motor Speedway.
Both brothers raced from 1980 to 1885. They and a third brother, Dale, all qualified for the Indy 500 in 1982.
Bill and Don Whittington were connected with a smuggling operation that helped fund their racing teams, taking in $73 million, according to the Drug Enforcement Agency. Bill Whittington admitted to running the organization, and Don Whittington helped invest the profits in legitimate businesses.
In 1986, Bill Whittington pleaded guilty to tax evasion and conspiracy to smuggle marijuana into the U.S. He was sentenced to 15 years in prison and ordered to surrender $7 million in assets. In 1987, Don Whittington pleaded guilty to money laundering charges in association with Bill Whittington’s activities.
Later that year, driver Randy Lanier was busted for heading another smuggling ring, and the DEA seized $150 million of his assets. John Paul Jr., a fourth Indy driver, pleaded guilty to a racketeering charge that wasn’t related to the Whittington or Lanier cases.
The Indianapolis Star contributed to this article.