Source: Sherman Publications

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Fmr. Odyssey owner, ex-VP plead guilty to defrauding IRS

June 18, 2014

By C.J. Carnacchio

Leader Editor

Two local businessmen, formerly connected with the Orion-based Odyssey Industries, learned that scrap metal pays, but crime does not.

Randal Bellestri, 57, formerly of Oxford, and Paul Michajlyszyn, of Leonard, could be facing prison time for defrauding the Internal Revenue Service (IRS) by failing to report large sums of cash income derived from scrap metal sales.

Bellestri failed to report more than $2 million in income from scrap metal sales, which resulted in a total loss of $652,246 in tax revenue for the U.S. government.

Michajlyszyn failed to report more than $270,000 in income from scrap metal sales, which resulted in a total loss of $88,102 in federal tax revenue.

Bellestri pleaded guilty June 9 before U.S. District Judge Arthur J. Tarnow to one count each of filing false tax returns and conspiring to file false tax returns with the IRS. 

His sentencing is set for Sept. 16.

The charge of filing a false tax return carries a maximum prison term of three years and/or a $250,000 fine. The conspiracy charge carries a maximum prison term of five years and/or a $250,000 fine. 

"Mr. Bellestri has fully cooperated with the investigation and in fact, voluntarily came forward with regard to the matter," said his Novi-based attorney Eric Nemeth. 

Nemeth said Bellestri's crimes are "something that he certainly regrets."

"He expressed that in court to Judge Tarnow," the attorney said. "We have every confidence that Judge Tarnow will issue a fair sentence. (Bellestri is) not making any excuses for what he did."

Michajlyszyn pleaded guilty June 11 before Tarnow to one count of filing false tax returns. 

His sentencing is set for Sept. 18.

Michajlyszyn's Detroit-based attorney, Jennifer Z. Belveal, did not return phone calls seeking comment.

Bellestri, who currently resides in Naples, Florida, is the former owner of Odyssey Industries, a company located at 3020 Indianwood Rd. in Orion Township. It manufactures machine tools for the production of parts for the aviation industry.

Michajlyszyn is the former vice president of Odyssey.

Bellestri sold Odyssey, along with Global Tooling Systems (GTS), to the United Kingdom-based Hampson Industries in 2008 for up to $314 million, which consisted of an initial payment of $213.3 million, $40 million in new Hampson shares and a deferred payment of $60.7 million that depended upon the companies' performance.

After the sale, Bellestri continued to work as an executive at Odyssey until July 2009.

American Industrial Partners bought Hampson Industries in 2012 and the purchase included Odyssey.

According to the criminal complaint filed in U.S. District Court, Bellestri had an agreement with Michajlyszyn regarding the sale of scrap metal left over from the company's manufacturing activities.

Authorities said Bellestri authorized Michajlyszyn to serve as a contact with the scrap metal buyer and collect the proceeds from the sales in cash.

"After receiving cash from the scrap dealer, (Michajlyszyn) would keep some for himself and pay the remainder to Bellestri at Odyssey's offices in Lake Orion, MI," the complaint stated.

According to a plea agreement, Bellestri received cash payments from the scrap metal sales between January 2004 and July 2008.

By accepting cash, authorities said Bellestri was able to conceal the sale proceeds from both Odyssey and the IRS.

"During the conspiracy, Bellestri and (Michajlyszyn) discussed with each other that they were not reporting the income from the scrap-for-cash scheme described herein on their federal tax returns," the complaint stated.

Bellestri failed to report the scrap metal proceeds on his federal income tax returns for 2005-08, causing his income to be understated by $2.155 million.

According to the complaint, Bellestri understated his income by $432,917 for tax year 2005, $426,308 for 2006, $697,755 for 2007 and $598,033 for 2008.

Michajlyszyn failed to report the scrap metal sales on his federal income tax returns for 2004-08, causing his income to be understated by $270,483.

According to the plea agreement, Michajlyszyn understated his income by $31,037 for tax year 2004, $48,102 for 2005, $47,368 for 2006, $77,528 for 2007 and $66,448 for 2008.

Bellestri's scrap metal dealings were brought up in December 2010 when Hampson Industries filed a lawsuit against Bellestri accusing him of "engaging in improper, self-dealing transactions" concerning Odyssey and GTS.

Among the allegations, the suit accused Bellestri of misappropriating more than $1 million through the sale of scrap metal from Odyssey.

Hampson ultimately accepted a $2.6 million out-of-court settlement from Bellestri.

Although he doesn't live in Oxford anymore, Bellestri still owns local property.

In Oxford, he owns the former industrial building on N. Lapeer Rd., across from Meijer, which houses multiple businesses.

According to the Oxford Township Treasurer's office, the building has a state equalized value (SEV) of $2.4 million.

In Addison, Bellestri owns 3.09 acres on Army Rd. with an SEV of $480,309, according to the Addison Treasurer's Office.