Energy drink company founder charged with tax evasion

By Mary Manning

Published Wednesday, April 15, 2009 | 10:36 a.m.

Updated Wednesday, April 15, 2009 | 12:59 p.m.

A former CEO of a Nevada sports energy drink company was indicted today by a federal grand jury in Las Vegas on tax evasion charges.

Russell Pike of Las Vegas is charged with one count of tax evasion for failing to file a federal individual income tax return for 2006 and failing to pay taxes on more than $6.9 million in income he earned in 2006, said U.S. Attorney Greg Brower of Nevada.

Pike is also charged with using nominees and a forward-dated stock sale agreement to conceal his true income from the IRS, Brower said.

Pike was arrested Tuesday in Las Vegas and is scheduled to appear in U.S. District Court today before U.S. Magistrate Judge Peggy A. Leen for an initial appearance and arraignment.

Pike founded Xyience, Inc., which made, marketed and sold sports energy drinks, most notably Xenergy, which was sold to more than 45,000 stores throughout the United States, according to the indictment.

Since Xyience started in 2004,, Pike received at least 12 million shares of Xyience stock, the indictment alleges. During 2006 Pike sold more than 4.4 million shares of his Xyience stock for about $6.9 million. This includes a sale on Nov. 2, 2006 in which Pike sold more than 3 million shares of Xyience stock to an investor for about $5 million, the indictment said.

In early 2007 Pike asked that the investor change the date of the stock purchase agreement from 2006 to 2007, so that Pike could avoid paying taxes for 2006.

In June 2006 Pike listed his income as $100,000-plus on a brokerage account application. In July 2007 Pike listed his assets as $27 million and his liabilities as $2 million on a life insurance application, the indictment alleges.

In September and November of 2006, Pike bought a condominium in Las Vegas, which was titled in the name of a nominee, made payments on a 2005 Lexus SUV that was held in the name of a nominee, and purchased a 2007 Mercedes Benz for $151,614.

If convicted, Pike faces up to five years in prison and a $250,000 fine.

Pike is a convicted felon who pleaded guilty to grand theft and forgery in California in 1987. He also pleaded guilty to money laundering in 1999.

Pike also had a default judgment in a civil suit filed against him by The Mirage after he wrote $300,000 in back checks over two days in 1995. He was found at fault.

The case is being investigated by the Internal Revenue Service's criminal investigation division and is being prosecuted by Assistant U.S. Attorney Nicholas D. Dickinson.