Washington state

Man pleads guilty in tax scheme

SPOKANE - A third Yakima man implicated in a scheme to rig U.S. Department of Agriculture foreclosure auctions pleaded guilty Thursday to filing a fraudulent federal tax return.

First Assistant U.S. Attorney Tom Rice said Douglas Henry Lemon, 56, pleaded guilty to a single count. Sentencing is scheduled for March 15, when Lemon faces a maximum sentence of a year in prison and a $100,000 fine.

Rice said Lemon was a bidder in foreclosure sales in which two other Yakima men have entered guilty pleas to bribery of a government employee. Lemon took $1,000 "hush money" from auctioneer Bacil Shirley and failed to report the money as taxable income, Rice said.

Shirley, 55, is awaiting sentencing in April.

Ronald G. Frank 58, owner of a Yakima tire store, pleaded guilty in July to bribery of a government employee and was sentenced in December to three years probation and a $90,000 penalty.

Shirley was an employee of Legal Couriers, Inc., which read foreclosure sales scripts at public auctions, according to court documents. In January 2003, Shirley rolled back the sales price of two USDA foreclosed properties in return for a kickback from the high bidder, court documents said.

Prosecutors alleged Shirley paid Lemon $1,000 to appease him after Lemon was outbid on a Yakima property, knowing that another bidder had obtained the property at an unlawfully reduced price.

A USDA employee found out about the deal and confronted Shirley, who later gave the employee $3,000 to keep quiet about the scheme, court documents said. The federal worker recorded the conversation.

According to the plea document, Frank admitted contacting the same USDA employee and offering him $10,000 for each foreclosed house he could buy at a reduced price before auction.