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Who’s Telling theTruth at Zale’s?

How chief financial officer Shearn Rovinsky took $600,000 and got away with it.
By John Merwin |

Just the week before, Ronnie Joe; Hiekerson’s eye had been drawn to Ac-’ count ;4455,; There was something very odd about it. Account 4455 is used to record property tax expense for the Zale Corporation’s futuristic gold headquarters on Stemmons Expressway. Lately that account had grown unusually large. Large enough to catch the attention of Hickerson, controller of Zale. Not in his 11 years as an accountant had he seen such an unusual entry: Property tax expense, $10,000.

Something just wasn’t right. Not only was $10,000 an unusually large tax payment, it was odd in another respect. Property tax assessments don’t come in round numbers, like $10,000, but odd-ball ones, like $6,432.08. Hickerson called for the “back-up” orders for this entry – handwritten orders that would reveal why such a strange entry would be made on the books of the Zale Corporation.

There, in the handwriting of Shearn Rovinsky, Ronnie’s boss, were the orders. They instructed Zale’s bookkeepers to record that somebody lent Zale $15,000. Nothing odd about that – Zale borrowed money from individuals all the time. But instead of the $15,000 going directly into Zale’s bank account at Republie only $5,000 had been deposited. The other $10,000 was missing, explained in Rovinsky’s handwriting as property tax expense.

Hickerson knew there was no way this could be right. Probably a mistake. He had been working for Rovinsky since 1968, and after all, Rovinsky was a CPA, and for 17 years one of Zale’s most trusted executives. If Rovinsky wanted to take some money, he could easily take it from the $100 million or so he had daily access to as treasurer and chief financial officer of the Zale Corporation.

The next morning, Tuesday, January 27, Hickerson walked into Rovinsky’s fourth floor office to ask him about Account 4455. He showed Rovinsky the back-up orders, and asked why Rovin-sky would issue such orders. Rovinsky stared at them a minute, then answered. “I had to do it for a friend of the company,” he said. Shearn Rouinsky was lying. He had to do something to throw Hickerson off the trail. Hickerson mustn’t know the $10,000 was missing. If he did, Hickerson might clumsily unravel the truth, which was infinitely worse than thinking Rovinsky had embezzled a mere $10,000. The truth was he had misrouted 60 times that much – more than $600,000, keeping much of it himself.

Rovinsky told Hickerson that he would return the $10,000 in time for closing the January books, so Hickerson left, making a note on his desk calendar for February 16, the day the January books would be closed. He wondered who that “friend of the company” might be, and would watch for the $10,000 repayment check. Forty-five minutes later Hickerson returned to Rovinsky’s office, sheepishly explaining that he didn’t mean to offend Rovinsky, but that it was his job to watch out for these things. Rovinsky didn’t look up until after Hickerson was through talking, and then stared at him silently, until Hickerson wheeled around and left. Maybe that would keep the lid on.

On Wednesday morning, Rovinsky decided to embellish his lie a little bit. He told Hickerson “the friend” was Ronnie Horwitz, who needed the money to buy some 1976 Super Bowl tickets in Dallas, which he later sold in New York. Wednesday afternoon, some lenders came in to purchase Zale notes, including Horwitz, and Roger Staubach, who brought a personal check for $8,000. All told, the lenders brought in $43,000. This was Rovinsky’s chance to straighten up Account 4455.

He took $7,000 cash out of his desk and added a personal check for $3,000. Adding this $10,000 to the $43,000 taken in that day, he could deposit the money in Republic, and clean up the 4455 entry which troubled Hickerson. Rovinsky’s plans to go to the bank were foiled when hordes of fourth floor employees streamed down to get Staubach’s autograph.

Thursday morning Rovinsky finally made it to the bank, and when he returned, took the deposit slip into assistant controller Joe Underwood’s office. As Hickerson walked in, Rovinsky was telling Underwood how to record the transaction. Set up a note payable for $43,000 (a proper entry), Rovinsky in-structed. But credit the other $10,000 to property tax expense, replacing the missing $10,000. Hickerson was bothered by this, a second highly improper entry, made to cancel out the first one. He also noted how odd it was that Ro-vinsky, a $75,000-a-year chief financial officer, had personally filled out the Republic deposit slip. Usually, a clerk did it.

Now he began searching Account 4455 more carefully. There were more odd entries, each of them ordered personally by Rovinsky. Fearing the worst, Hickerson decided that it was time to take his evidence to the top. At 5:30 p.m., after most employees had left the building, he rode the elevator to Zale’s 18th floor,executive offices. Hickerson walked into the office of Don Zale, president of the corporation. For the next 45 minutes, Hickerson carefully explained what he had found during the last several days, blowing the lid right off one of the most spectacular business scandals in Dallas history.

Today, ten months later, Shearn Rovinsky walks free, acquitted of charges that he stole hundreds of thousands of dollars from the Zale Corporation. The main thing on Rovinsky’s mind is revenge – revenge against the people who publicly humiliated him, then left him twisting in the wind, hoping he would take the rap for what Rovinsky claims is massive tax fraud cover up. Revenge against the people who broke up his family and drove him to attempt suicide.

Now the table has turned. For two weeks Rovinsky had to sit before a jury and the press, watching his private life unveiled – his profligate habits of wild spending and big gambling, and his affair with 26-year-old Sherri Oliver. For two weeks he had to sit and listen while Zale family members lied to the jury, he thinks, stonewalling it, trying to sacrifice him to save their own corporation.

Had Rovinsky been convicted, he would have been a less-than-credible witness for the Internal Revenue Service and the Securities and Exchange Commission in any action they might take against Zale. But now IRS and the SEC have a witness with the where -withal to lead government investigators to devastating evidence, if indeed it does exist, as Rovinsky claims it does.

Having Rovinsky on the loose is no laughing matter for Zale, and lots of people know it. The day after Rovinsky’s acquittal, Zale stock fell sharply on the New York Stock Exchange, trading 151,000 shares, about 15 times its normal volume. During the next two trading days more than one million shares changed hands – far more than any other stock on the exchange.

From the beginning, it had seemed that Shearn Rovinsky was destined for notoriety. He was born in 1933, son of Leon Rovinsky, who as a boy had immigrated with his family from Russia. Shearn’s name was drawn from the newspapers, where his parents had read about the Galveston financial titan Shearn Moody.

Before he was old enough to enroll in school, young Shearn was amazing his parents with his facility for numbers. Shearn was featured in an April 2, 1939, Dallas News story, captioned “Dallas Wonder Boy, 6, Proves to be Veritable Human Calendar.” The story said young Shearn could be given any date during the next 10 years and respond quickly with what day of the week the day would be. Rovinsky could recite the U.S. presidents forward and backward, naming their birth dates, dates of office and death dates. He grew up in old South Dallas, attending Forest Avenue High (now Madison) for three years, before moving to Highland Park, where he was graduated. At Highland Park, Ro-vinsky met a young man named Donnie Zale, son of Morris Zale, who 25 years earlier had founded Zale’s Jewelers, in Wichita Falls.

Rovinsky attended SMU, graduating in 1953 with a degree in retail marketing. He spent three years as a supply officer aboard the aircraft carrier USS Yorktown, then returned to Dallas to work as an intelligence officer for IRS, specializing in tax fraud cases. While working for IRS, he studied accounting at SMU, and within two years had passed the CPA exam. He married Linda Burk, whose brother had married Ben Lipshy’s daughter. Lipshy, chairman of Zale’s, asked Rovinsky to join the Zale accounting department, which he did, in 1959. His first boss was Don-nie Zale, who was head of the accounting department.

Rovinsky’s financial abilities were quickly recognized. Although he was not a family member, he rose through the ranks as if he were, right behind Donnie Zale. In 1963 he became assistant treasurer, and in 1964, took over the accounting department. In 1966, Rovinsky was appointed treasurer and chief financial officer of Zale, a recognition of his ingenious financial talent, which the Zale family often talked about. Rovinsky knew that he would never become president or chairman of Zale-those positions seem reserved for relatives such as Donnie Zale, who like Rovinsky, is 43, and perhaps Bruce Lip-shy, about ten years younger. But he hoped that one day a new title would be created for him, something like senior vice president for finance.

Rovinsky hardly looks like the sort of man who would be wheeling and dealing with $600,000 in misappropriated funds. He is 5’8″, 147 pounds – a man of delicate features – small hands with well proportioned facial features. He gazes very intently from behind black, horn rimmed glasses, often listening while resting his forefinger on his chin. He speaks softly and dresses very corporately, from his thin, executive socks, to his flashy gold wristwatch. Rovinsky’s demeanor is even, broken only by a nervous blinking when he feels uncomfortable.

Much of what happened secretly at the Zale Corporation is undisputed. There is absolutely no question that Shearn Rovinsky misdirected hundreds of thousands of dollars. There is also no question that much of that money went right into his personal bank account at Republic National Bank, which handles accounts for Zale executives and the corporation itself.

Shearn Rovinsky took most of the money in two ways. Much of it was taken by cashing income tax refund checks, payable from the U.S. Treasury to some Zale-owned corporation. (Zale has approximately 1,700 stores, which until recently were organized as 1,100 wholly-owned corporations. Each corporation filed its own income tax statement, and thus received its own refund check.) Many of these refund checks arrived unexpectedly, which made them, or other unexpected checks, convenient fodder for Rovinsky. Because they were unanticipated, there was no receivable set up for them on Zale’s books, and thus Rovinsky could cash the refund checks without making any sort of entry on the books.

The second scheme involved Zale’s commercial paper accounts. Lenders, such as Roger Staubach, would come in with personal checks or cash. In exchange, they received a piece of commercial paper, a note payable from Zale to the holder, usually within 60 to 90 days. Rovinsky would set up a notes payable account for the money owed, but instead of balancing that entry by depositing all of the money in a Zale account, he would deposit part of the money to Zale and pocket the rest, chalking it up as property tax expense. Again, the accounts were in balance, because the credit to notes payable equaled the total debits to cash and to property tax expense. But the accounting was patently fraudulent.

The critical question is whether all of this money was taken without the authorization of Donnie Zale and Ben Lip-shy. If it was, then Rovinsky was stealing from the corporation. A seven-woman, five-man jury decided November 4 that it wasn’t convinced beyond a reasonable doubt that Rovinsky’s motive for taking the money was theft. (The penalty for theft could have been up to 20 years in the state penitentiary.)

Rovinsky’s explanation is fascinating. He claims that he was authorized to take the $600,000 or so, and keep most of it himself, while paying out the rest to various Zale officials, including Don-nie Zale and Ben Lipshy.(Rovinsky says the money he took was actually a loan, authorized by Zale and Lipshy, and secured by a promise from Lipshy for $2 million in Zale stock. Rovinsky never received the stock, and Lipshy denies he even discussed a stock gift with Rovin-sky.) By acquitting Rovinsky, the jury wasn’t necessarily convinced that Rovinsky’s story is entirely true, but that it might be true.

If anything is clear from the Rovin-sky trial, it is that somebody is lying. Either Rovinsky has fabricated an intricate story, or Ben Lipshy and Donnie Zale have spun out a carefully coordinated tale to protect themselves from income tax fraud allegations.

Hickerson naively began unraveling the misappropriations during the last week of January, 1976. By Friday, January 30, the cat was just about out of the bag. That morning, at 7 a.m., Hick-erson reported to work early to meet with Donnie Zale and Ben Lipshy to explain to Lipshy what he had told Zale the night before. Lipshy and Zale listened, then told Hickerson to take Joe Underwood and confront Rovinsky with the entries.

At 8:30 a.m., Hickerson and Underwood walked into Rovinsky’s office and confronted him. Rovinsky broke into a cold sweat, which Hickerson had never seen him do before. He reiterated that the missing money had gone to help a friend, and then for the first time, hinted that some of the funds were needed to cover some political contributions. Hickerson remained unsatisfied with Rovinsky’s nebulous explanation.

In the early afternoon, Rovinsky decided to go up and discuss the disintegrating cover up with Donnie Zale. Here the Rovinsky accounts and the ZaleLipshy accounts begin to differ critically.

Donnie Zale says Rovinsky came in and said he had made a mistake by misappropriating the money, although his intentions had been good. He was trying to help out a friend who needed to improve his personal balance sheet. “I told Shearn that this was totally against company policy,” Zale says. “He used very poor judgment.”

Rouinsky’s account of the same meeting is far different from Zale’s account. “I told Donnie that I had mentioned political contributions to Hickerson,” Ro-vinsky said. “Donnie got livid. He exploded, “You goddamn son-of-a-bitch,’ Zale shouted, ’why didn’t you just tell Walter Cronkite so it could be on the Channel 4 news tonight? Go down and tell Hickerson something else!’ “

Friday evening Rovinsky telephoned Donnie Zale at home. Zale said Rovinsky called merely to offer an explanation about the missing money. Zale then called Hickerson to tell him what Rovinsky had said.

But Rouinsky says he called Zale to tell him about a possible cover-up explanation. “Donnie told me he wanted to telephone Hickerson to tell him about it,” Rouinsky explains. “He did, then called me back. ’I spoke to Hickerson,’ Zale said, ’and he isn’t buying your story. If you hadn’t messed up in the first place we wouldn’t be into this.’ “

Saturday morning Donnie Zale called in Touche Ross & Co., Zale’s outside auditors, and asked them to audit the commercial paper account. Zale says that was all the auditing that was necessary at the time. Rouinsky says Zale and Ben Lipshy agreed with him to limit the independent audit to the commercial paper account, thinking they could explain $65,000 missing, but not the hundreds of thousands missing from the income tax refund checks.

On Sunday, Zale executives flew to a company meeting in San Francisco. Characteristically, Rovinsky and his wife flew first class, although Rovinsky spent much of the flight back in the coach compartment, working with Ben Lipshy.

The San Francisco meeting lasted three days. Each day Zale and Lipshy telephoned Dallas to find out how the audit was going. Each day Hickerson told them of newly discovered irregularities. By Tuesday, the figure was $143,000. In Dallas, Hickerson began to worry about Rovinsky’s access to Zale money. The Zale accounts at Republic were bulging with payments from Christmas charge customers, perhaps totalling $20 million. He knew that Ro-vinsky had direct access to the money, and also knew that after the San Francisco meeting, Rovinsky was going to Hawaii. Could it be that Rovinsky would fly away from the United States with Zale funds and never return?



Shortly before noon, Wednesday, February 4, the Zale meeting adjourned in San Francisco. In an empty room, Zale, Lipshy and Rovinsky met privately, in what became an important discussion. Zale and Lipshy told Rovinsky not to fly to Hawaii, but to return to Dallas so the mess could be straightened up. Rovinsky protested that his wife was looking forward to the Hawaii trip, but agreed to go back to Dallas. Rovinsky claims that he and Donnie Zale got into a shouting match about whose fault the scandal was, and Lipshy finally stepped in to separate them, just before they came to blows. Rovinsky flew back to Dallas that night, fending off inquiries from Zale employees who wanted to know why he wasn’t going to Hawaii. Rovinsky knew that he was to meet the next morning with Zale and Lipshy, but what he didn’t know was that the meeting would be the most important event of his life.

Rovinsky arrived at the Zale office at 6:30 a.m., Thursday, February 5, a pleasant day. Immediately he went to the 18th floor executive offices. At 7 a.m. Rovinsky was ushered into the board room where he faced a committee of Donnie Zale, Ben Lipshy, Ronnie Joe Hickerson, Joe Underwood and an outside accountant, Joe Bock. Rovinsky was stunned. Hickerson flashed a computer printout showing that $250,000 was missing from Account 4455. Where was the money, the committee demanded?

Rovinsky fell into a state of shock. His head was spinning and his words babbled hopelessly, making no sense to the inquisitors. He thought Ben Lipshy would save him. He didn’t. Finally someone asked Rovinsky if he needed the money to pay gambling debts. Ro-vinsky denied that he needed the mon-ey for that. Finally Lipshy rescued Ro-vinsky from the meeting, taking him into his private office.

Only two men, Rovinsky and Lipshy, know for certain what was said during that 30-minute private conversation. Under oath, one of them lied about it. There’s simply no way to reconcile the differences between their accounts of the February 5 conversation.

Lipshy told the jury that “Rovinsky said he was tired and needed to go somewhere to rest, some place where he wouldn’t be disturbed. “He turned and walked out of my office.”

Rouinsky’s uersion is this: “Ben told me that if all of this were known, it would be a tremendous embarrassment to his family. “You could go to Brazil or Israel. We have lots of contacts there.’ ” Rovinsky left Lipshy’s office, took the elevator to the basement, bypassing his own fourth floor office, where security guards already stood watch. It was the last time he ever set foot in the Zale building.

Rovinsky walked to his car, got in, and drove north on Inwood. At Park Lane he spotted Sherri Oliver, who was driving south on Inwood. He motioned for her to follow him to her apartment. Rovinsky knew Sherri Oliver, a Zale secretary, quite well. They had been carrying on an affair, one that lasted a year, ending two months before. Rovinsky’s wife had become suspicious, and he thought it best to break off the relationship.

He stumbled into her apartment, still in a state of shock. He said Ben and Donnie were trying to do him in. Rovin-sky lay down on the couch, staying there most of the day, occasionally sitting up to stare out the window. Late in the afternoon he went home.

Rovinsky felt a failure. He thought that he had let Ben Lipshy down, by allowing the cover-up to fall apart. The best thing for him to do, Rovinsky decided, was to kill himself. Friday morning, February 6, Shearn Rovinsky dressed for work as usual. He kissed his four children goodbye – for the last time, he thought. Rovinsky drove around the corner and waited for his wife Linda to take the three youngest kids to school, and for Kirk, 16, to drive his car to St. Mark’s.

By 8:15 a.m. the family had left and Rovinsky drove into the garage, shutting the garage door. He went into the house, wrote suicide notes to several Zale executives, and one to his family, placing them on his dresser, in the downstairs bedroom. Rovinsky then took a pillow, walked through the kitchen, opened a door to the garage and started the car motor. He placed the pillow in the back seat, and lay down to die. Rovinsky closed his eyes, waiting to drift off into a sleep of death, a sleep which would rescue him from what he couldn’t face – his own failure.

Rovinsky lay there for an hour, alternately sleeping and waking. Perhaps it was because the car had an anti-pollution device, perhaps it was because the garage was too large or maybe it was because the temperature was in the low 30’s and the car windows were rolled up, but Rovinsky didn’t die. His housekeeper arrived after an hour, and burst into the garage. Seeing Rovinsky, she ran through the house screaming and called the police. Rovinsky was the ultimate failure. He couldn’t even kill himself.

The telephone rang – it was Sherri Oliver calling to say that Bruce Lipshy, in a fit of rage, had just fired her. Apparently Bruce had discovered her affair with Rovinsky. (At the trial, she testified that she was having an affair with Bruce Lipshy too.) The doorbell rang – it was the police. Rovinsky convinced them that no one had committed suicide. He ran back to the telephone and told Sherri what he had tried to do. She begged him to come to her house, where they decided to drive to her mother’s home in Oklahoma. They left late that Friday morning, and later in the day drove to a friend’s house in Fort Smith, Arkansas, where for the next six days Rovinsky hid, thinking he might be murdered.

Back in Dallas, the situation exploded. Donnie Zale told the newspapers Rovinsky had been fired. Rovinsky’s brother-in-law, Larry Burk, entered Rovinsky’s bedroom closet and hauled offRovinsky’s personal financial records and had the locks changed on the doors. Burk said he took the records to protect his sister’s interest in the Rovinsky tax returns, and changed the locks in case someone found Rovinsky’s body, and stole the house key.

Rovinsky returned to Dallas on February 12. On February 16, he was indicted for theft, and on February 18, his wife left him. A few days later he had to sell the last of his unencumbered Zale stock to pay a $25,000 cash bond. For the next eight months he worked full-time on his own defense, with the help of free legal counsel from Billy Ravkind, a criminal lawyer. On November 4, after eight days of testimony, Rovinsky was acquitted.

It may be that we will never know who is telling the truth about those conversations between Rovinsky and his superiors, Zale and Lipshy, or more important, who is lying under oath. Rovin-sky was saved from conviction by a couple of things, neither of which Zale witnesses could adequately explain. The first was the openness with which Rovinsky misappropriated the money, and then spent it lavishly.

●From 1971-76, Rovinsky’safter-tax income rangedfrom $31,000 to $58,000. Inthose five years, he had deposited $1,334,399 in his Republic bank accoun

●His spending was aboveboard. In 1972 he spent seven and one-half times hispublished salary at Zale-owned stores. His gamblinglosses averaged $28,000 ayear, and his Republic account was constantly overdrawn. In 1974 he was overdrawn 181 days, once for$17,732.

Why would Rovinsky openly spend far more money than Zale executives knew he was making, keep his bank account red flagged with huge overdrafts and divert funds in his own handwriting, if he was worried about being nailed for misappropriating Zale funds?

The second thing that damaged Zale’s case against Rovinsky was some testimony by Zale executives about how their own corporation is run.

●Some overseas employeesare paid partially in cash, sothey won’t have to reportall of their income in Britain or Israel, where taxrates are very high.

●At least until 1972, someZale executives were reimbursed with corporate cashfor political contributions.In 1972, records show thatat least four Zales gavemoney to the Nixon campaign, and two donated tothe Wilbur Mills committee.

●As of March 31, 1976, Zalehas more than one milliondollars on loan to select employees, at no interest. (One such loan, to cover an employee’s stock market losses, totalled $230,000.) Last March, banks were charging 7? percent interest on such loans.

●Some Zale employees are receiving expense money without furnishing documenting receipts. One Zale executive receives $20,000 allowance annually, “over and above his reimbursable expenses.”

●Zale chairman Ben Lipshy professed to know remarkably little about certain important transactions. Although supposedly he personally approves loans to employees, Lipshy said he didn’t know why his son Bruce turned down a $13,000 raise, to take a loan instead. Evidence suggests that Bruce might have done it to avoid income during a bitter divorce proceeding.

If Zale Corporation would engage in such questionable activities as these, the jury reasoned, it was possible that they played fast and loose with Rovin-sky.

The proverbial ball is now in Zale’s court, with IRS, spurred on by Rovin-sky, examining Zale’s records right now. If Rovinsky is correct in his assertions that a massive tax evasion scheme has been perpetrated by Zale and Lipshy, some Zale executives may be in serious trouble. Heir apparent to the corporate throne is Donnie Zale, who at 43 could have his career destroyed. Chairman Ben Lipshy, 66, is approaching retirement, but stands to lose his polished image as the corporation’s civic ambassador, an honorable man who devotes much time to fund raising. Interestingly enough, Zale founder M.B. Zale has managed thus far to stay out of the public fray. Rovinsky claims the tax evasion began in 1959, at the insistence of M.B. Zale himself. If Rovinsky can prove this, then Zale’s venerable godfather, who still is quite active in the company, may be pulled into the muck.

It may be that Shearn Rovinsky, a very bright man, has created a tale of intrigue, one good enough to raise doubts in the jury’s mind, and also in the minds of IRS and the SEC. Rovinsky may be lying.

On the other hand, if Zale executives,especially Donnie Zale and Ben Lipshy,are stonewalling it, and government investigators find out, the darkest hourfor one of America’s largest retailers isyet to come.

Can Rovinsky Prove Tax Fraud?

Behind the charges that Shearn Rovinsky stole hundreds of thousands of dollars in Zale money stands a much more serious accusation, advanced by Rovinsky. Rovinsky claims that Zale’s threw him to the wolves in an attempt to ensure that he took the blame for any illegal acts which might have been committed at Zale. Rovinsky alleges that at the direction of Morris Zale, Donnie Zale and Ben Lipshy, he devised a number of schemes to help Zale’s avoid paying income tax – millions of dollars of income tax. Here are a few of the schemes which Rovinsky alleges he carried out, at the direction of his superiors:



During Zale’s great expansion in the 1960’s, the company bought many small jewelry chains. Often the purchase price of these chains was less than their actual worth. Rovinsky claims the gain Zale’s made by purchasing these stores should have been reported on Zale’s books as a profit. Instead, he claims the profits were spread across various Zale subsidiary lines, moving those profits into stores which were losing money, so Zale’s wouldn’t have to pay high taxes on the acquisition profits.



Under previous tax law, the first $25,000 profit in Zale’s 1,100 subsidiary corporations was taxed at 28 percent, far lower than the 48 percent tax rate on profits above $25,000. Rovinsky claims Zale’s constantly spread profits from one corporation to another, to ensure that one subsidiary didn’t make $50,000 while another made nothing. “They used to call me Frank Nitty,” Rovin-sky says, “because once Nitty said ’with this pen I can make you rich or make you poor.’”

Rovinsky claims Zale saved taxes by misallocating the timing of its income. Zale pays taxes quarterly and was able to convince IRS, he says, that the company made 70 percent of its profits during the Christmas quarter. That means Zale’s paid only 10 percent of its annual taxes in each of the other three quarters, thus allowing Zale’s to operate on money that should have been paid to IRS. “Uncle Sam was our banker,” Rovin-sky said.

Other alleged questionable acts include: overstating expenses, thus understating income, and reducing taxes; understating inventory, to reduce property taxes; and making lavish gifts to the Post Exchange purchasing agents, in hopes of securing business.

If Shearn Rovinsky can lead IRS to evidence which results in Zale Corporation paying back taxes, it is quite possible that he can make a bundle of money for doing so. Rovinsky can ask to be paid as an IRS informant, and as such, could receive up to 10 percent of any back taxes IRS collects. Rovinsky claims Zale’s owes millions in back taxes, and if he can prove it he will be far better paid by IRS than he ever was by Zale Corporation. Rovinsky says he is aware of the possibility of collecting an informant’s fee, but hasn’t discussed it with IRS.

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