Former state senator pleads guilty to federal tax crime | Crime

Shibilski, 60, of Merrill, was originally indicted in September 2020 on charges that included improper storage and disposal of hazardous electronic waste, wire fraud and conspiracy to defraud the U.S. On Monday, he pleaded guilty to a single count of willfully failing to collect or pay tax, under a plea agreement he signed with prosecutors in April.

While the other charges will be formally dismissed when Shibilski is sentenced in September, U.S. District Judge William Conley noted that acts committed by Shibilski that led to the environmental charges against him will be considered when determining the range of possible sentences Shibilski could face under advisory federal sentencing guidelines.

The maximum sentence for the tax conviction is five years in prison and a $250,000 fine. 

Shibilski represented the 24th Senate District from 1995 to 2002, when he unsuccessfully ran for lieutenant governor. Later that year, Shibilski was appointed state tourism secretary by then-Gov. Jim Doyle, but stepped down in April 2003.

Court documents state that Shibilski was the owner, chief executive officer and chief financial officer of a company called 5R Processors, which he purchased in 2013. He created two other companies — Pure Extractions in June 2014 and Wisconsin Logistics Solutions in February 2015.

Court documents state Shibilski withheld federal employment taxes for those two companies but failed to pay them to the Internal Revenue Service.  

In all, Shibilski failed to pay $197,458 to the IRS in 2015 and 2016.

According to the plea agreement, Shibilski met in 2015 with an IRS revenue officer to talk about the unpaid employment taxes and said the taxes were not paid because the company was not making a profit. He said he was responsible for paying the taxes and would be getting a loan to do that. 

“I was an officer in both of these companies,” Shibilski reiterated to Conley in court Monday. “I had a duty to ensure that the taxes were paid. I didn’t do that.”

The indictment originally issued in 2020 alleged that Shibilski illegally stored and disposed of broken and crushed glass from cathode ray tubes at facilities in Wisconsin and Tennessee, and that the material was hazardous because of lead toxicity.

The plea agreement requires Shibilski to pay $200,000 toward remediation of 5R sites in Wisconsin and Tennessee. 

In 2020, Shibilski sued the former owners and other officers of 5R in federal court, alleging he was the victim of a scheme to defraud him and personally saddle him with 5R’s debts. The lawsuit was thrown out by Conley in February 2021. Shibilski has since refiled the lawsuit in Rusk County Circuit Court.

Other officers of 5R were charged in federal court with conspiracy to defraud the government. James Moss pleaded guilty and was sentenced last year to 18 months in prison. Bonita Dennee pleaded guilty last year and received a five-month prison sentence. 

A conspiracy charge against former 5R owner Thomas Drake was dismissed by prosecutors in 2021 after a competency examination determined he was suffering from dementia, according to court records.