Clarke, age 58, a former resident of Eden Prairie, MN who now lives in Florida,  pled guilty to four counts of filing false tax returns for calendar years 1996-1999.  He entered his plea before Chief Judge James Rosenbaum in Minneapolis.

Clarke was the former Chairman of the Board, Chief Executive Officer, and part-owner of  Katun Corporation, a privately-owned Bloomington based corporation that manufactures and sells parts and supplies for photocopiers and office equipment throughout the world.

During his guilty plea hearing, Clarke admitted that between 1997 and 2001 he intentionally underreported his income by more than $3.4 million on his personal federal income tax returns he filed with the Internal Revenue Service.  These false tax returns resulted in a tax loss of approximately $1.4 million.

As part of his Plea Agreement, Clarke has agreed to pay a $2 million fine and to cooperate fully in the payment of his outstanding federal tax liabilities, interest, and penalties.  In addition, Clarke has agreed to pay $3 million in extraordinary restitution to the State of Minnesota.  The restitution tentatively will be allocated as follows: $1.25 million to the Minnesota Center for Crime Victim Services that includes $250,000 to the Minnesota Crime Victims Reparations Board; $1 million to help fund the creation and implementation of state-wide Economic Crime Task Forces; $250,000 to the Minnesota Department of Revenue for advertising, training, or education programs concerning compliance with state tax laws; and $500,000 for other state or county related programs to be determined.

In court today, Clarke admitted that he underreported his income by repeatedly omitting his receipt and use of various items of personal use which were acquired with Katun funds. Many of the items Clarke acquired were used in connection with ranches he owned in Gunnison, CO.  These items included more than 40 vehicles and motorized equipment he acquired or had a lease-hold use, including two hay balers costing $141,000; a snowplow costing $109,000; a tractor costing $81,750; various promotion items costing $74,000; two pickups costing $53,000 and $49,000; a dump truck costing $49,000; a flatbed truck costing $42,000, and many other vehicles.

Clarke also failed to report his receipt and use of other things of value including more than $146,000 in firearms; more than $134,000 in jewelry; more than $89,000 in artwork; more than $71,000 in construction expenses; payments to relatives totaling $62,000; payments to former Katun employees totaling $56,000; and more than $40,000 in vehicle-related expenses for a former family member.

As part of his Plea Agreement, Clarke is obligated to cooperate fully in the investigation and prosecution of other persons in connection with an ongoing criminal investigation.

Clarke faces a maximum potential penalty of three years in prison and/or a $250,000 fine on each of the four counts.  The actual sentence will be determined by Chief Judge Rosenbaum based on the federal sentencing guidelines.  A sentencing date has not been set.

The case is the result of an ongoing investigation by the Internal Revenue Service, Criminal Investigations and the Minnesota Department of Revenue.  Assistant United States Attorney Hank Shea and members of the Hennepin County Attorney’s Office are prosecuting different aspects of the case.