San Martin Couple Sentenced for Tax Evasion

A former San Martin couple who dodged more than $1 million in
taxes
– and are required to repay it – now face an additional 10
months of home detention, five years of probation, $5,000 each in
fines and a joint restitution of $54,183, for filing a false tax
return.
Gilroy – A former San Martin couple who dodged more than $1 million in taxes – and are required to repay it – now face an additional 10 months of home detention, five years of probation, $5,000 each in fines and a joint restitution of $54,183, for filing a false tax return.

Michael and Jan Watts pleaded guilty in May to filing a false tax return. Plea agreements reveal that in 1994, the couple omitted more than $180,000 from a consulting company and an off-shore venture called Fundamental Technologies Inc. from their tax return. By omitting the income, the Watts received a $54,183 refund from the IRS.

Monday, the Watts were sentenced to repay their $54,183 refund and do time at home. They also face a $1 million fine for unpaid taxes and fees, from a previous indictment in 2004 for tax evasion.

Alice Bloom, a South County resident who met the Watts while working for Sarah’s Vineyard west of Gilroy, said the couple lived extravagantly in San Martin. Jan Watts spoke often of flying to New York City to get her hair done by a famous stylist, Bloom said, and prized $1,000 bottles of wine and expensive jewelry.

“She was always talking about the things they’d bought,” said Bloom. “My husband and I figured they’d made their money from selling his high-tech company … Then we found out about this. Well, at least they got caught.”

The Watts’ sentence could have been far heavier: The maximum penalty for filing a false tax return is three years in prison, a $250,000 fine plus restitution.

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