Florida Retiree Used Annuities In Plot To Evade $1M In Taxes

A 72-year-old former Menomonee Falls man was sentenced to six months years in federal prison Dec. 18 for failing to pay more than $1 million in taxes on millions of dollars he earned overseas and parked in secret Hong Kong accounts.

John Miller Ragland, now living in Bonita Springs, Florida, pleaded guilty in June to one of the four counts in a 2018 indictment. As part of the plea deal, he agreed to pay $1.43 million in unpaid taxes and interest for the years 2007-2013.

Ragland told the presentence report writer that he finally realizes what he did was wrong, mismanaging his business affairs and "allowed willful negligence to take me down the road of tax evasion."

But federal prosecutors questioned Ragland's remorse. "One does not conceal more than $3 million in income and evade more than $1 million in taxes by accident or poor planning."

In a sentencing memo, Assistant U.S. Attorney Matthew Jacobs wrote that Ragland's criminal conduct, which began when he was 60, was calculated, intentional and "motivated solely by greed."

Jacobs argued for a two-year prison term, well below the five-year maximum.

"Merely requiring tax cheats to pay their unpaid taxes would encourage individuals to similarly cheat knowing that if they are caught all they will have to do is repay the money," Jacobs wrote.

In court, Jacobs said "of course" Ragland has to pay back what he stole, but that's not punishment. He said prison time is required to deter others and promote respect for the law.

Defense counsel Kathleen Quinn argued that tax loss is the prevailing factor in calculating sentence in tax cases and that since the government ultimately will get back all its money, probation and some house arrest was the better punishment.

Ragland provides care for his wife of 50 years and other relatives, Quinn said, and has no other criminal record. She called him a good man and a good neighbor in his Florida retirement community.

Ragland has a master's degree in physics and worked as an engineer and project manager before starting his own consulting firm, according to his lawyer's memo. Around 2007, he was selling electronic circuit boards for a Chinese company, and earning commissions. In 2013, his business partner suspected Ragland wasn't reporting those full commissions, which they were supposed to split, and reported him to the IRS.

According to court records, Ragland earned more than $3.1 million in commissions from the China-based business that he deposited in accounts in Hong Kong, but did not report the income or the existence of the foreign accounts as required on his U.S. tax returns.

In 2015, he lied to federal agents about his failure to report, saying he had been advised by his Hong Kong bank that money he put into annuities there didn't have to be reported as income until he withdrew the funds from annuities. But records showed he regularly withdrew funds in amounts less than $10,000 and moved $230,000 from a foreign account to buy his Florida residence.

In court, Ragland, dressed in dark suit, white shirt and tie, told U.S. District Judge Lynn Adelman that he's gone over his actions for the past five years and couldn't rationalize them.

"I'm guilty of tax evasion," he said. "From my heart, I'm sorry for what I did. I cheated my country and my family."

Ragland must surrender to whatever facility the Bureau of Prisons identifies in the coming weeks. He must spend a year on extended supervision after his release and continue paying off any remaining restitution. As of Dec. 18, he had repaid all but about $900 of the $1.43 million.