Washington County man sentenced for tax crimes, swindling short-term renters

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A Washington County man convicted of tax crimes and swindling customers of his short-term rental business was sentenced to serve an additional 52 days in jail and ordered to give back the money in question.

Jurors last month convicted Karl Evald Auleciems, 57, on 2021 charges that stemmed from him renting out his West Lakeland Township home and other properties for weddings and other events.

Karl Evald Auleciems (Courtesy of the Washington County Sheriff’s Office)

Auleciems entered into short-term rental contracts with people, but never paid the sales tax to the Minnesota Department of Revenue and failed to return some renters’ security deposits. He also didn’t disclose income on his tax returns.

Jurors deliberated for about four hours before convicting Auleciems of all 16 charges against him: eight counts of failing to pay or collect or remit sales tax between February 2018 and February 2020, six counts of filing a false or fraudulent return between October 2015 and February 2020 and two counts of theft by swindle for failing to return to customers damage deposits between December 2018 and October 2019.

Auleciems had faced 74 tax-related felonies, but the charges were reduced to 16 at the time of trial in “consideration of presumptive consequence upon conviction, judicial resources and judicial efficiency,” the attorney’s office said last month.

According to the criminal complaint, Auleciems operated an unregistered business, KEASons Enterprises, which he used as a conduit to rent out his properties to short-term renters via Airbnb, HomeAway, Vrbo and other websites.

An investigator with the Minnesota Department of Revenue began looking into alleged tax violations by Auleciems in July 2019.

The investigation found he filed false income tax returns by omitting the sale of rental property, omitting consignment business income, omitting substantial amounts of rental income, overstating mortgage interest and property taxes, omitting interest and dividends and creating fictitious net operating losses, the complaint says.

Meanwhile, rental agreements stated the nearly $2,000 security deposit would be refunded within 90 days of checkout, according to the complaint. But Auleciems failed to return security deposits amounting to nearly $18,000 “without explanation or proof of damage,” the complaint states.

Apology letters

Auleciems was sentenced last week.

His attorney, Robert Ambrose, asked Judge Douglas Meslow for a downward departure from state sentencing guidelines, saying he has no prior criminal history besides petty misdemeanors traffic offenses, and that he is remorseful for what he did.

As renters began to testify at trial, Auleciems began to show remorse to defense counsel, Ambrose wrote in a memo to the judge, adding that his client “genuinely feels bad about what happened.”

Auleciems has written out cashier checks and apology letters to the six renters who were awarded judgments in conciliation court and the one renter who testified at trial without a judgment, according to Ambrose.

Meslow granted the downward departure, giving Auleciems 97 days in jail — he gets credit for 45 days he already served — followed by five years of probation. He will begin serving the jail time July 1. Meslow also gave Auleciems 30 days to pay the renters and 90 days to pay the state.

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