MADISON, WIS. – Timothy M. O’Shea, U.S. Attorney for the Western District of Wis., announced that Kevin Shibilski, 61, of Merrill was sentenced on Feb. 21, 2023, by Chief U.S. District Judge James D. Peterson to 33 months in federal prison, followed by three years of supervised release, for failure to pay $858,101 in employment taxes to the IRS for tax years 2014-2016. On May 16, 2022, Shibilski pleaded guilty to failing to pay over employment taxes to the IRS from Pure Extractions Inc. and Wisconsin Logistics Solutions LLC.
Shibilski was a minority owner and CEO/CFO of 5R Processors (5R), which had locations in Ladysmith, Catawba, Glen Flora, Wis., and Morristown, Tenn. 5R was involved in the recycling of electronic equipment and other assets. Pure Extractions Inc. (Pure Extractions) was created by Shibilski in June 2014 to handle 5R’s recycling operations. Pure Extractions took on all of 5R’s recycling customers, warehouses and equipment, income flows from recycling, most of 5R’s recycling employees, but none of 5R’s debts. Wisconsin Logistics Solutions LLC (Wisconsin Logistics) was created by Shibilski in February 2015 to handle 5R’s trucking and logistics operations. Wisconsin Logistics took on most of 5R’s trucks and equipment, drivers, dispatchers, pick-up routes, licenses, and all of 5R’s income flows from trucking and logistics, but again, none of 5R’s debts.
At sentencing, Judge Peterson found that the government presented overwhelming evidence showing that Shibilski had been in charge of 5R’s operations and finances since March 2013, and had been the primary decision maker on which bills to pay and not pay, including not paying the employment taxes for 5R, Pure Extractions, and Wisconsin Logistics. Judge Peterson found that Shibilski had not sincerely accepted responsibility for his actions, noting that Shibilski kept blaming everybody else, including the IRS, his co-defendants, and other 5R employees for the nonpayment of the employment taxes. Judge Peterson added that as the CEO/CFO and part-owner of 5R, Shibilski was the person in charge at 5R, which had a brother-sister relationship with Pure Extractions and Wisconsin Logistics.
Judge Peterson explained that a sentence of imprisonment was necessary in this case to send a deterrence message to two groups. One, business owners who willfully fail to pay their employment taxes and need to know their actions will have consequences and they will go to federal prison. Two, the general public who need to know that prison is not just for the impoverished or drug dealers, and that people who willfully fail to pay the IRS and use the tax funds for other purposes, will go to prison.
As part of the plea agreement, Shibilski agreed to pay monies towards the remediation of the leaded glass storage sites for 5R in Wis. and Tenn. in the amount of: (1) $100,000 to the Wis. Department of Natural Resources, and (2) $100,000 to Paint Oak LLC, Knoxville, Tenn.
Shibilski’s co-defendant, Bonnie Dennee, pleaded guilty to conspiracy to defraud the U.S., relating to 5R’s illegal storage of leaded glass. On Jan. 26, 2021, Dennee was sentenced to five months in prison. Shibilski’s co-defendant, James Moss, also pleaded guilty to conspiracy to defraud the U.S. relating to 5R’s illegal storage of leaded glass, as well as conspiracy involving the failure to pay over 5R’s employment taxes. On Nov. 23, 2020, Moss was sentenced to 18 months in prison.
The charges against Shibilski, Moss, and Dennee were the result of an investigation conducted by the Wis. DNR, Bureau of Law Enforcement, the U.S. Environmental Protection Agency, Criminal Investigation Division, and IRS Criminal Investigation. The prosecution of the case has been handled by Assistant U.S. Attorney Daniel J. Graber.