The founder of an Oregon-based brokerage firm will spend more than four years in prison after he was found guilty of tax evasion, according to the Department of Justice.
James W. Millegan was sentenced this week to 51 months in prison, and was ordered to pay more than $2.5 million to the Internal Revenue Service, as well as more than $1.4 million to 12 clients. A jury found Millegan guilty of tax evasion after a trial last year.
“It’s been said that the difference between tax avoidance and tax evasion … is the thickness of a prison wall,” said Bret Kressin, special agent in charge of the IRS Criminal Investigation Seattle Field Office. “Mr. Millegan is learning that firsthand.”
The McMinnville, Ore.-based Millegan founded J.W. Millegan, Inc. in 1996 after prior stints with Lehman Brothers and Ragen McKenzie, according to his BrokerCheck profile. He primarily served clients in the Portland and Salem, Ore. areas.
In 2009, Millegan started to avoid paying income taxes; the broker would submit accurate returns, with annual income that exceeded $1 million, and would accurately show what he owed, ranging as high as $350,000, but then didn’t pay the amount, according to the DOJ. To evade the IRS, Millegan would put his income in numerous bank accounts, including $1.4 million in his deceased mother’s trust account.
Personal assistants to Millegan described him as a “prolific spender,” including purchasing a $4.5 million home in Portland and a $1.3 million beach house. He showed dual interests in horses and vintage cars; in addition to purchasing stabling and riding lessons, Millegan invested in Wallace Bridge, an equestrian competition center in Oregon.
The broker also bought several Rolls Royce and Bentley cars for personal use. In 2003, he bought a 1938 Rolls Royce Phantom III, and spent $800,000 restoring the automobile, including shipping it to a specialist in the United Kingdom. He then showed it off at car shows in the U.S. and Europe during the next several years, according to the Justice Department.
In 2016, Financial Industry Regulatory Authority arbitrators ruled he’d churned investment accounts for several clients and fined him $450,000, with Millegan filing for bankruptcy and shutting the firm soon after.
After a two-week jury trial in Oregon federal court last November, Millegan was found guilty of one count of tax evasion; he’d been separately charged with wire fraud, but those charges were dismissed at his sentencing.