* Douglas G. Radtke, age 60, from Minneapolis, the owner of Radtke Construction Corporation and Scaffold Service, Inc., was convicted of one count of conspiracy, eight counts of failure to collect and pay tax, and two counts of mail fraud;

 * Scott C. Radtke, age 36, from St. Paul, Scaffold Service’s Sale Manager and Vice-President-Sales and Marketing, was convicted of one count of conspiracy and three counts of mail fraud;

 * Michael T. Donohoe, age 39, from Somerset, WI, Scaffold Service’s former Field Operations Manager and then Project Manager, was convicted of one count of conspiracy, one count of filing a false tax return, and three counts of mail fraud.

The former Controller and then Chief Financial Officer of Scaffold Service, Rita A. Galston, age 51, from Richfield, pled guilty prior to trial to one count of failure to collect and pay tax and one count of falsification of ERISA records.

Two other co-defendants,  Mark D. Radtke, age 38, from White Bear Lake, and Vernon L. Bodin, age 52, from Brooklyn Park, were acquitted.

Evidence during trial showed that the defendants engaged in a conspiracy to lower their labor costs and increase company profits by engaging in a fraudulent payroll, tax and compensation scheme that ran from December 1995 to at least January 2000. It was part of the conspiracy that the defendants arranged for employees of Radtke Construction and Scaffold Service to work in exchange for payment in the form of “cash checks” which were not subject to withholding taxes or union negotiated fringe benefits. In an attempt to avoid IRS reporting requirements which are triggered by any cash payment greater than $600, the defendants arranged for payments to employees of up to $599.99 under their Social Security Number, and then required employees to supply names and Social Security Numbers of relatives and friends to serve as nominees for the issuance of additional “cash checks.”   More than 500 “cash checks” in the sum of approximately $175,000 were issued during the course of the conspiracy.

By paying employees through “cash checks,” Radtke Construction was able to avoid paying FICA payroll tax,  income tax, unemployment and disability insurance premiums, and fringe benefit payments including payments to fund pensions and to provide health insurance coverage.

In an attempt to conceal the conspiracy, Galston created, signed, and submitted fraudulent IRS Employer’s Quarterly Federal Tax Returns and Michael Donohoe filed false U.S. Individual Income Tax Returns.  The defendants caused fraudulent reports to be submitted to third party administrators which understated the benefits that Radtke Construction was supposed to pay.

The defendants each face a maximum potential penalty of five years in prison and/or a $250,000 fine on each count for which they were charged.  The actual sentences will be determined by Chief Judge Rosenbaum based on the federal sentencing guidelines. Sentencing dates have not been set.

The case is the result of an investigation by the Internal Revenue Service - Criminal Investigations and was prosecuted by Assistant United States Attorney Susan Burke.