Douglas Larson, 72, of De Pere will spend two years in federal prison and three years on supervised release.
GREEN BAY — The owner of a Grand Chute business convicted of not paying payroll taxes will spend two years in federal prison, Senior U.S. District Judge William C. Griesbach ruled Friday.
Douglas Larson, 72, of De Pere, pleaded guilty in January to one count of failure to truthfully account for and pay employment taxes to the Internal Revenue Service. Larson owns MODS Client Services, formerly known as MODS International, a business that repurposes shipping containers by manufacturing and installing them into commercial buildings.
The business has been subject to numerous accusations of fraud, according to court records. Complaints in multiple civil cases detail Larson failing to meet deadlines and complete MODS projects after customers have made downpayments. Prior to the creation of MODS, court records describe similar financial issues with Midstate Corporation, Larson’s previous company that was located at the same address as MODS, 5523 Integrity Way in Grand Chute.
A prosecution sentencing memorandum states Larson has a criminal history of fraud dating back to 1977. He was convicted in Dane County of “pattern of racketeering,” for which he served about a decade in prison in the ’80s to early ’90s. In 2001, Larson was convicted in Outagamie County of theft of movable property for withholding an employee’s child support funds from their paycheck, but not sending those funds to the government, according to court records. In 2002, he was convicted in Brown County of theft of more than $2,500 in a business setting for not paying subcontractors while working as a general contractor for a construction project in 1999.
At Larson’s sentencing hearing at the U.S. District Court for the Eastern District of Wisconsin, Griesbach told Larson his “selfish” behaviors were not a unique lapse in judgement, but have been part of “much of his adult life.”
“At 72, you’re long past the age that one would expect someone to grow past this behavior,” Griesbach said.
Even Larson’s defense attorney, Kathleen Quinn, said she agreed that Larson should be prohibited from running any companies in the future.
“He is not a good business man,” she said at the sentencing hearing. “He has no business running a business.”
According to the prosecution’s sentencing memorandum, Larson failed to pay payroll taxes to the IRS for nearly 14 years. Between January 2018 and September 2021, Larson paid wages to his employees, withholding money for federal payroll taxes, but did not pay those withheld wages to the IRS — owing the IRS a total of $396,082.77 for that time period, court records state.
However, prosecutors and defense attorneys acknowledged in Larson’s plea agreement that prior to 2018, and for a stretch of time between 2023 and 2024, Larson withheld more employment taxes from employees of MODS and Larson’s related company, Orion Logistics LLC — making the total owed to the IRS more than $1.1 million.
The IRS spent seven years trying to resolve the case before referring it for criminal investigation, the prosecution’s memorandum says.
Additionally, Larson inherited more than $1 million in 2021, but did not use that money to pay taxes he owed, Assistant U.S. District Attorney Zachary Corey said at Larson’s sentencing.
Corey recommended a sentence of 18 to 24 months in federal prison.
Quinn asked Griesbach to sentence Larson to a period of house arrest rather than prison time, due to his numerous health issues.
In the defense’s sentencing argument, Quinn described Larson’s poor health and expressed concerns that he would not receive the medical treatment he needs in a federal prison — even if he is sent to one of the Federal Bureau of Prison’s medical facilities.
Quinn pointed to staffing shortages in the federal prison system, which she said are leading to “devolving conditions,” particularly in light of the recent decision by the federal government to draw back prison staff retention pay. She said she worries Larson’s health conditions could become life-threatening in federal prison.
Corey said that a lesser sentence of house arrest at Larson’s “mansion on the river” would not be a punishment.
Griesbach said he has not received guidelines about avoiding a prison sentence due to a defendant’s health, and that it is the Bureau of Prison’s responsibility to provide humane conditions.
In fact, Griesbach said, he initially thought the sentencing guideline range of 18 to 24 months in prison seemed “woefully inadequate” for the severity of Larson’s crime.
If not for Larson’s failing health, Griesbach said, he would consider a sentence of five years in prison.
“It seems that there are many people that suffered from your business practices,” Griesbach told Larson.
Following Larson’s time in prison, he will spend three years on supervised release.
Griesbach ordered that Larson owes a total restitution of $1,102,845.13, to be paid in monthly installments of $500, or however much he can afford, once he is released.
Contact Kelli Arseneau at 920-213-3721 or karseneau@gannett.com. Follow her on X, formerly Twitter, at @ArseneauKelli.
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2025-04-04 21:53:59