Middleton Sport Bowl Owners Sentenced to Six Months Each

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By: 
Kevin Murphy

MADISON–Owners of the Middleton Sport Bowl (MSB) were each sentenced Friday in federal court to six months in prison for not paying income taxes on cash skimmed from video gambling machines at their University Avenue business.

Dudley Hellenbrand, 67, and Cherie Hellenbrand, 45, both of Middleton, told an undercover IRS agent posing as a prospective buyer of the Sports Bowl in late 2017, that the five video gambling machines could provide $175,000 a year in untaxed income, according to Assistant US Attorney Daniel Graber.

The couple was charged with evading taxes from 2010-17 during which the unreported income from the machines totaled $746,009 and created a federal tax loss of $268,852. Adding the loss to the state of Wisconsin increased the amount to $350,191, which the couple repaid before sentencing.

In asking for a sentence of a year and a day for the Hellenbrands, Graber wrote the court:

Gambling machines were at MSB when the couple purchased it in the late 1990s. Thomas Laugen, 69, of Sun Prairie, owned and operated Global Vending, LLC, and showed the Hellenbrands how to skim proceeds from the machines.

Laugen was sentenced to a year and a day in prison on June 19 after pleading guilty to tax evasion and creating a tax loss exceeding $548,000.

The Hellenbrands initially agreed to keep 60 percent of the machines’ proceeds and Laugen created the tax documents that substantially unreported the skim, Graber said when the Hellenbrands pleaded guilty in July 2019.

Dudley Hellenbrand maintained that his wife, Cherie, a business teacher at Middleton High School, didn’t know about the skimming and unreported income until late 2016. However, after learning about it, Cherie didn’t call a halt to the scheme but instead, had Laugen fired and contracted with gambling machine vendor, Bullseye, and arranged another 75-25 proceeds split.

“It could have been ended when they moved to Bullseye In October 2017…Instead, they signed with Bullseye and worked with Colin Albany and Mary Lavine. Cherie dictated the terms of the new VGM contract…She only wanted to report $20,000 in VGM cash receipts to the IRS and State of Wisconsin in year one,” Graber wrote.

Cherie’s attorney, Jenny Johnson Wear, said her client wasn’t involved in the 14-year-long scheme that her husband and Laugen were. 

“She had no idea that the machines were generating this much money and perhaps Laugen was cheating them. There was no extravagant spending or lifestyle,” Wear told District Judge James Peterson.

Peterson said he had a “hard time believing” Cherie didn’t know something was amiss as she was able to bank her teacher’s salary and live from MSB’s earnings.

The couple bought a house with a swimming pool and later added tennis courts but that was before 2001 and their house increased in value to about $500,000 not from upgrades they made but due to rising property values in Middleton, Wear said.

While the Hellenbrands are “good people” like everyone, they are a mix of good and bad qualities, Peterson said.

“They are able to compartmentalize a part of their lives and justify to themselves that they can break the law,” he told them in a hearing conducted via Zoom.

Even though both Hellenbrands are valuable, supportive members of the community, their cheating the government may have undermined all that work, Peterson noted.

Both attorneys argued against a prison sentence, saying their clients had already paid a high price with the loss of reputation in small community, Cheries’ teaching license revoked, and making full restitution.

“(Cherie) is deeply remorseful, this experience is a growth opportunity and prison wouldn’t add to what she’s already endured,” said Wear who sought a probation-only sentence.

Dudley’s attorney, Richard Coad said his client has cooperated with the government’s investigation and should be factored into the sentencing decision.

The government has indicated it will pursue more gambling machine vendors, said Coad, who urged Peterson to reserve harsher punishment for those who set up business owners in these schemes.

Peterson said some incarceration was necessary for the couple because criminal prosecutions in tax cases provide greater general deterrence to the public than in drug cases.

A prison sentence also is supported by the protracted time the offense occurred and the substantial sum involved, the judge said.

The couple may have not been prepared for the certainty of a prison sentence as they both needed time to consult with their attorneys regarding who should serve their time first in order for one to be home with their teenage daughter.

Dudley will report to prison on July 27 and Cherie’s report date is June 14, 2021.

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