Las Vegas sports drink czar sentenced for evading taxes

By Dave Toplikar

Published Monday, Aug. 27, 2012 | 3:38 p.m.

Updated Monday, Aug. 27, 2012 | 3:52 p.m.

A Las Vegas man who founded the company that created Xenergy, a sports drink, was sentenced today to more than four years in prison for tax evasion.

Russell Pike, 50, the former chief executive officer of Xyience Inc., was sentenced to 52 months in prison by U.S. District Judge James C. Mahan.

Pike was convicted in April of one count of tax evasion for evading taxes due on more than $7.9 million of income in 2006.

Pike was the founder of Xygience Inc., which manufactured, marketed and sold sports energy drinks. One of the drinks, Xenergy was sold in more than 45,000 stores throughout the country, according to evidence presented at his trial.

The sentence was announced today by Kathryn Keneally, assistant attorney general for the Justice Department's Tax Division, and Daniel G. Bogden, U.S. Attorney for the District of Nevada.

Pike had received at least 12 million of the company's shares since it was formed in 2004.

In 2006, he sold more than 4.4 million shares for about $7.9 million. That included a November 2006 sale of more than 3 million shares for $5 million.

In early 2007, Pike requested that the investor change the date of the stock purchase from 2006 to 2007 to avoid 2006 taxes, according to information from the trial.

Evidence from the trial also established that, during 2006, Pike led a lavish lifestyle, which included driving luxury cars and betting millions of dollars at local sports books.

"There is no energy drink that gives you the ability to outrun IRS Criminal (Investigation)," said Paul Camacho, IRS Criminal special agent in charge, who is based in Las Vegas.

"We relentlessly follow the money to ensure crime does not pay," Camacho said in a prepared statement. "In this case, crime paid 52 months in prison. Just another example of unabated greed inflicting a heavy price.”

Besides the 52-month prison term, Mahan sentenced Pike to three years of supervised release, with a special condition he pay $1,189,773 in restitution to the IRS.