A judge on Wednesday sentenced a former CEO of a Utah-based multi-level marketer of nutritional supplements to prison, after he pleaded guilty to tax evasion.
Sixty-two-year-old Peter Nordberg of Alameda, California, earned a salary and commissions as the CEO of Max International, but he underreported his income through a scheme involving an LLC that he registered in the state of Delaware, according to the U.S. Department of Justice (DOJ).
Nordberg caused Salt Lake City, Utah-based Max International to pay his bonus income to a nominee entity he established and used a bank account in the entity’s name to pay personal expenses, DOJ said in a news release.
“Nordberg concealed the bonus income and nominee entity from his return preparer and filed false tax returns with the Internal Revenue Service (IRS) that underreported his income,” the news release said, causing a tax loss of roughly $275,000.
U.S. District Court Judge Dee Benson ordered Nordberg to serve 12 months and one day in prison for tax evasion. Nordberg also was sentenced to one year of supervised release and ordered to pay $354,770 in restitution to the U.S. Treasury.
In late January 2009, Nordberg registered MAX MLM Partners LLC in the state of Delaware, according to a 2017 grand jury indictment against him. Nordberg subsequently opened a bank account in Draper, Utah in the name of MAX MLM Partners, which he and his wife were the only members, the indictment noted.
According to federal prosecutors, Max International paid Nordberg a salary of $331,336 in 2009 and $282,954 in 2010. He also earned bonus income of $491,311 in 2009 and $357,738 in 2010.
“For at least calendar years 2009 and 2010 … Nordberg failed to report the income that he directed to MAX MLM Partners, LLC, either on his individual income tax returns or on an entity return in the name of MAX MLM Partners, LLC,” the indictment alleged.
Robert J. Fedor, a lawyer representing Nordberg, had asked the district court to impose a term of home confinement and an extended term of probation. In a court document, he said his client had no criminal history and recognized “his failure to provide all sources of income to his accountant was wrong, and it resulted in the preparation of false income tax returns, which he ultimately filed with the IRS.”
Fedor also said his client “suffered from significant mental health issues, which were diagnosed and being treated during the offense period.” Although Nordberg was let go from his previous employer, he found a new job that would enable him to repay the IRS, Fedor added.
Federal prosecutors recommended the judge impose a prison sentence of 18 to 24 months followed by a one-year period of supervised release.
“Throughout the time period in question, Mr. Nordberg maintained total control over the LLC but filed no tax returns for the LLC,” federal prosecutors wrote in a sentencing memorandum signed by Assistant U.S. Attorney Ruth Hackford-Peer. “When he signed his individual tax returns for 2009 and 2010, he knew that half of the income that he had received from his employment in those years had gone to the LLC and had not been reported on those tax returns.”
Hackford-Peer said, “[D]eterrence is especially important in cases such as Mr. Nordberg’s, considering his position as a CEO, his abuse of federal and state corporate law to establish and maintain his LLC, and the many steps he took to conceal his income.”
Fedor and Max International did not immediately respond to requests for comment on Nordberg’s sentence.