JOHNSTOWN — A 45-year-old Somerset County former coal mining owner and resident of Rockwood was sentenced Wednesday to one year and one day in federal prison, followed by one year of supervised release, and must pay a $40,000 fine in federal court to charges of tax evasion and filing a false income tax return , both felonies.
On Jan. 18, Jason R. Svonavec pleaded guilty to two counts involving tax evasion before U.S. District Judge Cathy Bissoon in the U.S. Western District of Pennsylvania.
"By claiming personal expenses as business deductions, Mr. Svonavec shirked a rightful duty and injured the integrity of the tax reporting system. Nothing excuses the misconduct. He says so himself: 'I am guilty of the offense of failing to report all my income for 2017 and 2018. No one is responsible for my misconduct but me. The fault ismine, period,'" according to a court memorandum written by his four defense attorneys.
“Surely, if ever a man is to receive credit for the good he has done, and his misconduct assessed in relation to his life overall, it should be at this moment of sentencing, when his future hangs in the balance," they wrote.
"In weighing the good here, there is much to admire. For the court’s consideration, we have provided over 30 letters and relevant exhibits. We will also present live testimony at the hearing. As the court shall see, Jason Svonavec’s life overall is one of goodness and decency," wrote Somerset attorney Matthew Zatko and Pittsburgh attorneys Neel Kapur, Robert Ridge and Efrem Grail.
Svonavec understands his conduct calls for a corrective response, according to the memorandum. "Without doubt he recognizes the embarrassment and loss of status he brought on himself and his family are consequences of his conduct. The felony criminal conviction, freely accessible in this internet age, will mark Mr. Svonavec for the rest of his life."
Svonavec paid the back taxes and fines. He paid the agreed restitution amount of $207,378 and an additional $266,676.84 to cover the fraud penalty plus interest on January 18.
His attorneys were asking for a probationary sentence, stating that sentences other than imprisonment are generally appropriate under these conditions.
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The defense team said because of Svonavec’s "extensive charitable works and contributions to his community," the court should grant a sentence of probation. Additionally, his attorneys said that Svonavec authorized them to meet with the government and negotiate an appropriate resolution of the investigation during the investigation and before the filing of the Information, basically official charges.
"The probationary disposition we advocate is no outlier. Courts have sentenced similarly situated defendants to below-guideline sentences," they wrote in a court document.
What was done
In 2017, Svonavec illegally expensed the construction of his home in Somerset through entities he operated at the time called Heritage Coal and Natural Resources LLC and Banshee Crane, according to the U.S. Attorney's Office.
He was charged with tax evasion, a felony.
In 2018, Svonavec filed a tax return reporting false tax deductions for Heritage Coal and Natural Resources LLC involving his home.
He was charged with filing a false income tax return, a felony.
In 2017 and 2018, Svonavec owned and operated "a highly successful coal mining company" in Somerset, called Heritage Coal and Natural Resources, LLC, a coal mining company, Banshee Crane and Farm LLC, a cattle and agricultural company, and Fearless One Inc., a heavy hauling trucking and leasing company. Svonavec’s wife, Angela Svonavec, is listed as president of Heritage Coal and Banshee Crane and Farm LLC.
Heritage Coal and Natural Resources, LLC, was sold to a new ownership group in February of this year.
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The Svonavecs came under investigation in 2015 and 2016 by IRS civil auditors who disallowed many of the expenses they listed as personal expenditures. The Svonavecs appealed. A settlement was reached in 2021 in which the Svonavecs were assessed $843,703 including penalty for 2015, and $808,749 for 2016, according to court documents.
In 2017, Heritage Coal was an enormously successful mining operation and, in 2017, Heritage Coal reported on the Svonavecs’ joint Form 1040, Schedule C, as “pass-through” approximately $17,233,760 in gross receipts. In2018, Heritage Coal reported significantly increased gross receipts of $24,590,379. In addition, for Tax Year 2017, Banshee Crane and Farm LLC, by way of filing a Form 1120S corporate return, reported $1,457,557 in sales. In 2018, Banshee Crane and Farm LLC reported $874,760 in sales revenue, according to a court memorandum.
The reason
Svonevec's home, a 7,300 sq. ft. stone house located at 192 Stone Ridge Lane on a 104-acre lot was assessed at $3 million in 2021. "Jason Svonavec, embarked upon a deceitful campaign to criminally expense much of the home’s construction costs, beginning with the general contractor, to electrical work, custom ironworking, the masonry, stonework, pool installation, among other elaborate features," the U.S. attorneys wrote.
Svonavec categorized the home construction costs "under the guise of false book entries in Heritage Coal and Banshee Crane and Farm LLC as “repairs and maintenance,” “site supplies,” “product purchases,” “supplies and maintenance,” “site maintenance” and “others,” paid for with personally executed business checks drawn on a business bank account.
Bissoon sentenced Svonavec on both counts in the Johnstown federal court. Assistant U.S. Attorney Gregory C. Melucci prosecuted this case. The IRS conducted the investigation.
This article originally appeared on The Daily American: Exclusive: Somerset coal mining owner sentenced to prison for felony tax offenses
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