Ladysmith, WI – Kevin Shibilski, former CEO/CFO of electronics recycling firm 5R Processors, was sentenced to 33 months in federal prison on February 21, 2023, for a scheme to defraud the IRS of over $858,000 in employment taxes. The case, investigated by the Environmental Protection Agency’s Criminal Investigation Division and prosecuted by the Department of Justice, revealed a complex web of shell companies designed to shield assets while failing to meet federal tax obligations.
According to court documents, Shibilski orchestrated the creation of Pure Extractions Inc. and Wisconsin Logistics Solutions LLC, ostensibly to take over recycling and trucking operations from 5R Processors. However, these new entities absorbed the revenue streams of 5R while deliberately avoiding the assumption of its debts, including substantial employment tax liabilities. 5R had locations in Ladysmith, Catawba, Glen Flora, Wisconsin, and Morristown, Tennessee. The government presented evidence demonstrating Shibilski’s direct control over financial decisions within all three companies, specifically the conscious choice to withhold tax payments.
Financial Maneuvering & Lack of Remorse
Judge Peterson, presiding over the case, explicitly rejected Shibilski’s attempts to deflect blame, noting his tendency to accuse the IRS, co-defendants, and other employees. The judge emphasized that as the CEO/CFO and a part-owner of 5R, Shibilski held ultimate responsibility for the company’s financial obligations. This lack of acceptance of responsibility was a key factor in the severity of the sentence. The court also highlighted the need for a strong deterrent message, not only to business owners tempted to evade taxes but also to the public, demonstrating that white-collar crimes carry serious consequences.
Environmental Impact & Remediation
Beyond the tax fraud, the case also touched upon environmental concerns related to 5R Processors’ handling of electronic waste. The company dealt with materials containing hazardous substances, including leaded glass. As part of the plea agreement, Shibilski agreed to contribute $100,000 to the Wisconsin Department of Natural Resources and an additional $100,000 to Paint Oak LLC in Knoxville, Tennessee, towards the remediation of sites where leaded glass was improperly stored. This demonstrates the interconnectedness of financial crimes and environmental violations, a growing area of focus for federal enforcement agencies.
Legal Ramifications
Shibilski was convicted under Title 18 U.S. Criminal Code, along with other federal statutes including the Resource Conservation and Recovery Act (RCRA) and specifically cited for violating 26 U.S.C. 7202, relating to willful failure to collect, account for, and pay over taxes. In addition to the 33-month prison sentence and three years of supervised release, Shibilski was ordered to pay $197,458 in restitution to the IRS and a $100 special assessment. The case underscores the EPA’s commitment to pursuing criminal charges against individuals who prioritize profit over legal and environmental compliance.
Key Facts
- Defendant: Kevin Shibilski
- Companies Involved: 5R Processors, Pure Extractions Inc., Wisconsin Logistics Solutions LLC
- Crime: Tax Fraud & Environmental Concerns
- State: Wisconsin
- Year: 2023
- Tax Fraud Amount: $858,101
- Sentence: 33 months federal prison, 3 years supervised release
- Restitution: $197,458 to IRS
- Remediation Payments: $100,000 to WI DNR, $100,000 to Paint Oak LLC
- Statutes Violated: Title 18 U.S. Criminal Code, RCRA, 26 U.S.C. 7202
GrimyTimes will continue to follow this case and report on any further developments regarding the environmental remediation efforts and potential civil actions related to 5R Processors’ operations.
Source: EPA ECHO Enforcement Case Database
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