The following examples of Employment Tax Fraud Investigations are written from public record documents on file in the courts within the judicial district where the cases were prosecuted.
Employment Staffing Agency Owner for Failure to Pay Over Payroll Taxes
On Sept. 30, 2015, in Dallas, Texas, Luis Morales was sentenced to 24 months in prison and ordered to pay approximately $209,000 in restitution. Morales pleaded guilty in January 2015 to an information charging him with failure to pay over payroll taxes. According to court documents, in June 2008, Morales formed A Staffing Solution, LLC, a temporary employment agency, and was listed as the organizer, registered agent and sole manager with the State of Texas. A Staffing was operated by Morales until the end of January 2010. In January 2010, Morales formed Morales Employment Services (“MES”). MES operated with the same employees and clients that had previously been with A Staffing. In March 2010, Morales, with the assistance of Manuel Chavez, formed MES & Company (“MES & Co.”). MES & Co. also operated with the same employees and clients who had previously been with A Staffing, and later with MES. Chavez pleaded guilty to a separate information in February 2015 and was previously sentenced to serve 36 months’ probation and pay $142,320 in restitution. Morales admitted that for tax years 2008 through 2012, he deducted and collected from the total taxable wages of his employees federal income, social security and Medicare taxes. Morales further admitted that he willfully failed to truthfully account for and pay over to the Internal Revenue Service all of the federal income, social security and Medicare taxes withheld. Morales used the retained withheld taxes for personal use.
Owner of Healthcare Company Sentenced for Employment Tax Fraud Scheme
On Aug. 6, 2015, in Baton Rouge, Louisiana, Charles A. Lanphier, of Lafayette, was sentenced to 48 months in prison, two years of supervised release and ordered to pay $5,981,405 in restitution. On Dec. 1, 2014, Lanphier pleaded guilty to failing to truthfully account for and pay over employment taxes. According to court documents, Lanphier owned and controlled Regional Healthcare, LLC, a health care company with operations throughout Louisiana and Florida. While Lanphier withheld employment tax contributions from his employees, he failed to file quarterly employment tax returns and failed to forward the taxes he had collected to the IRS. Lanphier’s scheme lasted from 2008 through 2011 and caused a loss of more than $2.5 million. It was discovered that the defendant’s relevant conduct stretched back to 2005 and caused a loss of more than $5.9 million.
Former Security Company Operator Sentenced for Employment Tax Fraud
On July 27, 2015, in Washington, DC, Jeffrey Norman Jackson was sentenced to 42 months in prison, three years of supervised release, and ordered to pay $595,687 in restitution to the IRS. Jackson previously pleaded guilty to failing to file federal employment tax returns and failing to pay over employment taxes. According to court documents, Jackson operated Innovative Security Services LLC. From 2006 through 2010, Jackson controlled the company’s finances and was responsible for filing the Employer’s Quarterly Federal Tax Returns. He was also responsible for paying over to the IRS the federal income, social security and Medicare taxes that were withheld from the wages of Innovative’s employees. Instead of paying the taxes that were due and owing, Jackson diverted money from the company for his personal use. Jackson has a previous federal conviction related to the theft of employment taxes. In 2006, he pleaded guilty to bankruptcy fraud after he stole $373,429 from a bank account that was set up to pay the payroll taxes for Jackson’s former company, Unlimited Security Inc., while that company was proceeding through Chapter 11 bankruptcy.
Texas Businessman Sentenced for Failing to Pay Federal Employment Taxes
On July 27, 2015, in Houston, Texas, William John Shoemaker was sentenced to 41 months in prison and ordered to pay $1,830,324 in restitution to the IRS. Shoemaker pleaded guilty on March 2, 2015 to willfully failing to account for and to pay federal tax withholdings to the IRS. According to court documents, Shoemaker conducted a retail clothing business through AA Concepts Inc., which operated its retail clothing business under various trade names. Shoemaker was responsible to account for and to pay over the federal income taxes and FICA withheld from the wages of the employees of the corporation. Shoemaker willfully failed to pay approximately $2.198 million in federal income tax withholdings and FICA withholdings from the third quarter of 2007 through the fourth quarter of 2012.
Owner of Employee Leasing Company Sentenced for Immigration and Tax Fraud Scheme
On July 23, 2015, in Philadelphia, Pennsylvania, Kim Meas, of Cambodia, was sentenced to 30 months in prison and ordered to pay $1.7 million in restitution to the IRS and $23 million in forfeiture. On Nov. 24, 2014, Meas pleaded guilty to two counts of conspiracy to commit an offense against the United States, two counts of transporting illegal aliens and two counts of failure to collect and pay federal income and employment taxes. According to court documents, Meas was the managing director of LS Services Corporation, an employee leasing company. Meas negotiated labor leasing contracts with various companies that leased temporary workers from LS. Meas established approximately 14 shell companies to create the illusion that the workers that LS leased to other companies were employees of the shell corporations. As such, the shell corporations, and not LS, would be responsible for collecting and paying employment and income taxes for the employees. Meas attempted to make it impossible for the IRS to determine the identity of the employer of the illegal aliens, as well as the amount of employment and income taxes that the employer of the illegal aliens was required to pay. The companies, that leased employees from LS, did not withhold federal income taxes on the wages paid to the employees, nor did these companies collect and pay to the IRS, employment taxes on the income earned by the workers.
Florida Man Sentenced for Payroll Tax Fraud Scheme
On July 10, 2015, in Miami, Florida, Sonny Austin Ramdeo, of Sunrise, was sentenced to 240 months in prison, three years of supervised release and ordered to pay $21,442,173 in restitution. Ramdeo previously pleaded guilty to wire fraud and money laundering. According to court records, from as early as 2005, Ramdeo was employed as the payroll supervisor at Promise Healthcare, Inc. and Success Healthcare Group, both of which owned and operated hospital facilities throughout the United States. As payroll supervisor for these two companies, Ramdeo was responsible for overseeing the payment of bi-weekly wages and related payroll taxes for approximately 4,000 employees. To execute this scheme, Ramdeo incorporated PayServ Tax Inc., and thereafter represented to officers and employees of Promise Healthcare and Success Healthcare that his company would handle the transfer of local, state and federal payroll taxes to the proper agencies. Instead of forwarding all of the monies due to the taxing authorities for employee payroll taxes, Ramdeo stole and embezzled the funds resulting in a $21 million dollar underpayment. By stealing the payroll tax money, Ramdeo caused hospitals to lay off employees, adversely impacted the maintenance and operations of seventeen acute care hospitals, jeopardized services provided to patients, challenged investors’ security, and reduced the amount of money the taxing authorities actually collected. Ramdeo used the proceeds from this fraudulent scheme in order to finance a now defunct charter airline company.
Tennessee Man Sentenced for Federal Tax Offenses
On July 9, 2015, in Knoxville, Tennessee, Zebbie Joe Usher, III, was sentenced to 70 months in prison, three years of supervised release and ordered to pay $29,174,931 in restitution to the IRS. On June 2, 2014, Usher pleaded guilty to tax evasion and conspiracy to commit tax evasion. According to court documents, Usher was previously the chief executive officer of Service Provider Group and was involved in the management of a number of companies, known as professional employer organizations (PEOs). These companies were engaged in the employee leasing and payroll processing business. The PEOs collected federal payroll taxes from employees and were required to turn over those funds to the IRS in a timely manner. However, instead of doing so, Usher and others used the funds for other company expenses and personal expenditures. In an attempt to avoid discovery of their nonpayment of payroll taxes, Usher and his co-conspirators submitted false documents to the IRS.
Former Company President Sentenced for Failing to Pay Over $3.3 Million in Employment Taxes
On July 8, 2015, in Spokane, Washington, Maria Elizabeth Townsend was sentenced to 40 months in prison, three years of supervised release, and ordered to pay $3,327,124 in restitution to the IRS. Townsend was convicted in February 2015 of ten counts of failing to pay over federal employment taxes. According to court documents and trial evidence, Townsend was the president and majority shareholder of Townsend Controls Inc. (TCI), a Pascoelectrical contractor. Townsend was required to file the Employer’s Quarterly Federal Tax Returns (IRS Forms 941) and pay over to the IRS the company’s federal income, social security and Medicare taxes, known as Federal Insurance Contribution Act (FICA) taxes, that were withheld from the wages of TCI’s employees. For 16 tax quarters, between Oct. 1, 2005, and Sept. 30, 2009, Townsend withheld $3,361,246 in federal employment taxes from the wages of TCI employees, but failed to pay over those taxes due and owing to the IRS. In addition to failing to pay over the taxes due and owing, Townsend also did not file any Forms W-2 for her employees for 2007 and 2008.
Former CEO Sentenced for $25 Million Fraud Scheme
On June 8, 2015, in Nashville, Tennessee, L. Brian Whitfield, formerly of Franklin, was sentenced to 240 months in prison and three years of supervised release. Whitfield was also ordered to pay a $1.8 million money judgment and more than $25.9 million in restitution. On Nov. 7, 2014, a jury found Whitfield guilty of conspiracy, wire fraud, theft from an employee benefit program, filing a false tax return, and money laundering. According to court documents, Whitfield controlled the finances and funds of the Sommet Group LLC, a payroll processing company that operated in Franklin, Tennessee. From 2008 until 2010, Whitfield diverted millions of dollars of client funds that had been earmarked to fund client employee retirement accounts, to pay health claims, and to pay taxes. Whitfield diverted millions of dollars to prop up affiliated companies that he controlled, spent millions of dollars to acquire the naming rights of Nashville’s professional hockey arena and paid for personal expenses. Whitfield also vastly underreported wages and taxes on Sommet’s quarterly employer tax return that he personally prepared and filed. Across six quarters from 2008 through 2010, Whitfield’s actions resulted in an underpayment of more than $20 million in taxes.
New York Business Owner Sentenced for Failure to Pay Employment Taxes
On June 5, 2015, in Brooklyn, New York, Eric Anderson, of Dix Hills, was sentenced to 18 months in prison, three years of supervised release and ordered to pay $1,080,222 in restitution to the IRS. On June 9, 2014, Anderson pleaded guilty to willfully failing to collect and pay over to the IRS employment taxes. According to court documents, Anderson owned three construction companies. From 2006 through 2008, Anderson used a commercial check cashing service to cash more than $10.5 million in checks paid to his construction companies representing gross receipts of the businesses. Anderson used a portion of the cash to pay his employees “under the table” wages. As the owner, Anderson was responsible for his companies’ finances and tax obligations. From 2006 through 2008, Anderson failed to collect or pay over to the IRS the employment taxes that were due quarterly on his employees’ cash wages. Anderson also used a portion of the cash from his businesses for his own personal use. He concealed much of his income from the IRS by filing false corporate and individual federal income tax returns or failing to file tax returns. In total, Anderson’s actions caused a tax loss of more than $1 million to the IRS.
Kentucky Businessman Sentenced on Employment Tax Fraud and Other Federal Charges
On June 4, 2015, in New York, New York, Wilbur Anthony Huff, a Kentucky businessman, was sentenced to 144 months in prison, three years of supervised release, ordered to forfeit $10.8 million and pay a total of more than $108 million in restitution to victims of his crimes, including the Federal Deposit Insurance Corporation and the IRS. Huff pleaded guilty on Dec. 23, 2014 to corrupt interference with Internal Revenue code, aiding in the preparation of false tax returns, willful failure to file taxes and conspiracy to commit bank bribery and wire fraud. According to court documents, from 2008 to 2010, Huff controlled O2HR, a professional employer organization (PEO) located in Tampa, Florida. Like other PEOs, O2HR was paid to manage the payroll, tax, and workers’ compensation insurance obligations of its client companies. However, instead of paying $53 million in taxes that O2HR’s clients owed the IRS, and instead of paying $5 million for workers’ compensation coverage expenses for O2HR clients, Huff stole the money that his client companies had paid O2HR for those purposes. Among other things, Huff diverted millions of dollars from O2HR to fund his investments in unrelated business ventures, and to pay his family members’ personal expenses. In addition, from 2007 through 2010, Huff engaged in a massive multifaceted conspiracy, in which he schemed to (i) bribe executives of a bank, (ii) defraud bank regulators and the board and shareholders of a publicly traded company, and (iii) fraudulently purchase an Oklahoma insurance company.
Former District of Columbia Technology Executive Sentenced for Failing To Pay Over Payroll Taxes
On May 5, 2015, in Washington, D.C., Kevin Bertram was sentenced to 30 months in prison, three years of supervised release and ordered to pay $897,921 in restitution to the IRS. On Feb. 10, 2015, Bertram pleaded guilty to willfully failing to pay over more than $900,000 in employment taxes, including federal income taxes, as well as the social security and Medicare taxes. According to court documents, Bertram operated Distributive Networks, LLC, a wireless technology firm, from 2004 through 2010. For the quarterly tax periods in late 2007 through mid-2009, Bertram failed to file Distributive Networks’ required quarterly IRS Forms 941 and failed to pay $927,921 in employment taxes due to the IRS.
Pennsylvania Man Sentenced for Conspiracy to Defraud the IRS of Approximately $1 Million in Employment Taxes
On April 23, 2015, in Harrisburg, Pennsylvania, Vanny Son was sentenced to 37 months in prison, three years of supervised release and ordered to pay $682,897 in restitution to the IRS. Son was indicted on July 10, 2014, along with Son Thach and Hung Danh, for participating in a conspiracy to defraud the IRS between 2006 and 2012. According to court documents, Son operated five employee leasing companies which supplied day laborers to several businesses in the Harrisburg area. Between 2006 and 2012, the businesses paid cash wages of more than $7 million to their employees without withholding any employment taxes, such as social security and Medicare taxes. As a result, approximately $1 million in employment taxes were not collected and paid to the IRS. Thach and Danh helped Son operate the employee leasing companies. Thach was previously sentenced to serve one month in prison and ordered to pay $682,897 in restitution. Danh remains a fugitive.
Minnesota Man Sentenced for Using Withheld Employee Taxes for His Own Benefit
On April 22, 2015, in Minneapolis, Minnesota, Daniel Nok Musa was sentenced to 51 months in prison, three years of supervised release and ordered to pay $284,000 restitution. According to court documents, between 2002 and Oct. 31, 2009, Musa owned and operated home health care businesses known generally as “Life Care.” As the owner of this business, Musa withheld income taxes and Social Security and Medicare taxes from his employees’ paychecks. However, beginning in 2002, Musa did not pay the full amounts owed, and repeatedly paid little or nothing to the IRS. Beginning in March 2006 and for the 12 subsequent tax quarters, Musa paid only a portion or none of the money withheld from his employees’ paychecks. Musa deducted a total of $101,340 from his employees’ paychecks and kept $85,122 for his own personal use.
Former Ohio Business Owner Sentenced for Employment Tax Fraud
On March 25, 2015, in Columbus, Ohio, David M. Eaton, of Delaware, Ohio, was sentenced to 20 months in prison, three years of supervised release and ordered to pay $1,232,770 in restitution to the IRS. On Nov. 5, 2014, Eaton pleaded guilty to willful failure to account for and pay over employment taxes to the IRS for the 2008 income tax year. According to court documents, between 1996 and 2011, Eaton was the president and sole shareholder of Eaton Systems Consulting, Inc. Beginning in 2005, Eaton failed to file the required Employer’s Quarterly Federal Tax Returns, Forms 941, with the IRS, and failed to pay over the federal income taxes and employment taxes withheld from the employees’ paychecks to the IRS. Eaton used the money for his personal and family living expenses among other things. In addition, Eaton prepared and filed false individual income tax returns with the IRS for the 2008 through 2011 tax years which reflected false federal tax withholdings that Eaton knew had not been paid to the IRS.
Four Family Members Sentenced for Defrauding IRS of Over $5 Million
On March 24, 2015, in Boston, Massachusetts, four family members who operated a temporary employment agency were sentenced for participating in a scheme to hide over $25 million in employee wages from the IRS. Margaret Mathes was sentenced to 80 months in prison, her daughter, Bosea Prum was sentenced to 24 months in prison, Prum’s brother-in-law, Sam Pich was sentenced to 24 months in prison and Prum’s husband, Thaworn Promket was sentenced to 12 months and a day in prison. All four were also ordered to pay over $6 million in back taxes and workers compensation premiums. According to court documents, the family members operated a temporary employment agency in Lowell that provided unskilled labor to local companies. Between 2004 and 2009, the defendants reported to the IRS that their temporary employees made about $2.2 million in wages, when the real figure was nearly $30 million. The defendants defrauded the agency’s workers compensation insurer, by hiding the true number of temporary workers employed, thus avoiding about $880,000 in insurance premiums. The defendants withdrew cash from about 20 bank accounts and paid their temporary workers “off the books.” These bank transactions, over 4300 in all, were structured so they could withdraw the cash needed to pay the workers without triggering federal reporting requirements.
Payroll Service Owner Sentenced for Tax Fraud and Embezzlement
On March 16, 2015, in Los Angeles, California, Scott Willsea, an owner of Paycare, Inc., was sentenced to 37 months in prison and ordered to pay $1,873,617 in restitution. Willsea previously pleaded guilty to failure to pay federal payroll taxes intended for the IRS. According to the plea agreement, from at least 2008 through March 2011, Willsea, along with his wife, Isabel, co-owned and operated Paycare, a Riverside-based payroll service. During the 2009 and 2010 tax years, Willsea and Paycare prepared quarterly payroll taxes for at least 15 different client companies for which they failed to account for and pay over to the IRS the full amount of tax due and owed by each company. In at least 35 separate instances, Willsea collected from client companies of Paycare the entire amount they owed the IRS for payroll taxes and failed to pay the IRS the full amount. In each instance, Willsea kept a portion of the money for his own use and benefit.
Payroll Company Owner Sentenced for Stealing Employment Taxes from Small Businesses
On March 10, 2015, in Providence, Rhode Island, Warren Hebert, of Barrington, was sentenced to 24 months in prison and ordered to pay $1.1 million in restitution to seven businesses and the Seekonk, Massachusetts Water District. Hebert pleaded guilty on Oct. 20, 2014, to eight counts of wire fraud and one count of impeding the administration of the Internal Revenue Code. According to court documents, Hebert was the owner of Checkmaster Payroll Services. Beginning in as early as April 2009 and continuing through at least October 2011, Hebert diverted for his own personal use approximately $1,266,680 in funds due to the IRS that he withdrew from at least seven small businesses operating in Rhode Island and Massachusetts which were to have been used to pay the clients’ federal employment taxes. In some instances, Hebert used some of the funds to pay additional tax liabilities, interest and penalties of other clients whose tax returns he had previously failed to accurately prepare, file and pay. Among the small businesses defrauded by Hebert were a nursery school, a local gym and a family owned moving company. Hebert also admitted to diverting funds from the Seekonk, Massachusetts, Water District, a municipal water agency.
Operator of Consulting Firm Sentenced for Theft and Failing to Pay Employment Taxes
On Feb. 9, 2015. in Reno, Nevada, Michael Stickler was sentenced to 30 months in prison, three years of supervised release and ordered to pay $200,000 in restitution to the U.S. Department of Health and Human Services and $100,899 to the IRS. Stickler pleaded guilty to failing to pay employment taxes and was convicted by a jury of the theft of federal grant money. According to court documents, Stickler owned and operated a company in Reno called Faith Based Solutions from 1999 to 2009. In 2007, Faith Based Solutions received $500,000 in federal grant money to teach non-profit organizations how to apply for federal government grants. Part of the grant terms required that $200,000 of the grant funds be paid to sub-grantees. However, Stickler drew down all of the grant funds in the first seven months of the grant period and no money was ever provided to any sub-grantee. Rather, Stickler put the money in accounts that he controlled and used it to pay large salaries to himself and family members, to take elaborate vacations, and for other items that were not approved by the grant. Stickler also collected and withheld employment and FICA taxes from his employees’ wages, but failed to pay them over to the IRS.
Owner of Kansas Tax Payroll Company Sentenced for Filing False Tax Return
On Jan. 27, 2015, in Kansas City, Kansas, John M. Moore, of Lenexa, Kansas, was sentenced to 78 months in prison for filing false tax returns that cost a Kansas company more than $744,000. Moore pleaded guilty to one count of filing a false tax return and one count of wire fraud. According to his plea, Moore owned Accent Payroll Services (APS) which was hired to provide payroll processing services for Tytan International LLC. From 2008 to 2010, APS was responsible for paying the wages of Tytan’s employees, withholding employment taxes, filing Tytan’s employment tax returns on IRS forms 941 and paying withheld employment taxes to the IRS. Moore transferred more than $2 million in employment tax withholdings from Tytan’s bank account to his company’s bank account. However, he only paid the IRS approximately $1.3 million. To keep Tytan from receiving notices from the IRS that taxes were not paid, Moore gave the IRS an address for Tytan at a post office box he controlled.
Pennsylvania Businessman Sentenced for Failure to Pay Employment Taxes
On Jan. 8, 2015, in Philadelphia, Pennsylvania, Theodore Harris, of Holland, Pennsylvania, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $378,777 in restitution to the IRS. Harris previously pleaded guilty to willful failure to pay over employment taxes. According to court documents, Harris owned and operated Clean Tech USA, a janitorial business located in Huntingdon Valley, Pennsylvania. Between Jan. 1, 2007 and Jan. 31, 2008, Harris willfully failed to collect and pay to the IRS approximately $93,000 in employment taxes owed for his employees.
Owner of Payroll Services Company Sentenced on Fraud Charges
On Jan. 7, 2015, in St. Louis, Missouri, Bradley Ferguson, owner of Fenton based Paymaster Business Solutions, Inc., was sentenced to 54 months in prison and ordered to pay $3,067,137 in restitution. Ferguson, of Washington, Missouri, pleaded guilty in August 2014 to one count of mail fraud and one count of money laundering involving his failure to remit federal, state and local taxes to the proper taxing authorities that had been deducted from victim client bank accounts. Ferguson also failed to remit FICA withholding to the IRS on behalf of his business clients. According to court documents, Ferguson’s clients included churches, youth organizations, child daycare facilities, law firms, and other businesses throughout the St. Louis area. From January 2005 through January 2014, Ferguson drafted funds directly from Paymaster business clients’ bank accounts in order to pay their federal, state, and local tax liabilities. However, Paymaster, at Ferguson’s direction failed to forward the Paymaster business clients’ funds to the taxing authorities in order to pay their tax liabilities then due and owing. Paymaster drafted in excess of $2,700,000 from Paymaster business clients’ bank accounts to pay client’s federal, state, and local tax liabilities, as well as FICA liabilities, for the period July 2013 through December 2013, but were not forwarded to the proper taxing authorities. Additionally, Ferguson, as Power of Attorney for Paymaster business clients, was contacted directly by the IRS and questioned as to the failure of payments of client federal tax liabilities. In December 2013, Ferguson retained the services of a commercial shredding company and directed that the Paymaster business client records be shredded and removed from the Paymaster offices.
Former CFO Sentenced for Failing to Pay Employment Taxes
On Jan. 5, 2015, in Houston, Texas, Lanny C. McCandles was sentenced to 18 months in prison, three years of supervised release and ordered to pay $262,791 in restitution. McCandles pleaded guilty on Sept. 2, 2014 to failing to pay employment taxes. According to court documents, McCandles became the Chief Financial Officer (CFO) of the medical supply company Complete Care Medical Inc. (CCMI) in January 2007. As CFO, he was tasked with keeping CCMI’s books, handling its payroll and preparing and filing its corporate tax returns. CCMI withheld appropriate federal income, Medicare and Social Security taxes from the paychecks of its approximately 30 employees. McCandles was responsible for depositing the withheld taxes to the IRS and filing an Employer’s Quarterly Tax Return (Form 941), the total amount of Medicare and Social Security taxes due and the total tax deposits. However, starting in March 2008 and continuing through March 2010, McCandles did not deposit these taxes with the IRS nor did he file CCMI’s quarterly tax returns. Instead, he embezzled the funds CCMI withheld from employee paychecks and used them to pay personal expenses. Furthermore, McCandles fabricated W-2 Forms and attached them to his personal income tax returns for tax years 2007, 2008 and 2009, resulting in the receipt of refunds to which he was not entitled. For tax years 2007 through 2010, he also fabricated W-2 Forms and attaching them to tax returns he prepared and filed on behalf of his girlfriend.
Owner of Maintenance and Construction Company Sentenced for Failing to Pay Payroll Taxes
On Dec. 19, 2014, in Manhattan, New York, Thomas Nastasi III, of Mt. Kisco, was sentenced to 12 months in prison, three years of supervised release and ordered to pay a $60,000 fine and restitution of $1,593,414. Nastasi pleaded guilty in August 2013 to failing to pay to the IRS payroll taxes of his companies, Nastasi Maintenance LLC and Nastasi Maintenance & Construction, LLC. According to court documents, from 2001 through 2011, Nastasi owned and operated several construction and maintenance companies. As the President of the companies, Nastasi was responsible for withholding payroll taxes from his employees and paying those taxes over to the IRS. Those taxes included the employees’ income taxes, social security, and Medicare taxes. Nastasi accumulated over $1.7 million in payroll taxes that were owed but never paid to the IRS. Those taxes also included the employer’s portion of Social Security and Medicare taxes for his employees. Instead of paying the companies’ payroll taxes to the IRS, Nastasi used company funds to pay hundreds of thousands of dollars in personal expenses. Nastasi also made false statements to the IRS in the course of its attempts to obtain delinquent tax returns and collect the corporate and personal taxes owed by Nastasi and his companies.
Virginia Man Sentenced for Failing to Pay Employment Taxes
On Dec. 12, 2014, in Alexandria, Virginia, Nureni Abayomi Baruwa was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $238,345 in restitution. According to court documents, Baruwa operated a car detailing business called NAB International Group of Companies Inc. Baruwa was in charge of withholding employment taxes from his employees’ wages, paying over the withheld amount to the IRS and reporting these amounts to the IRS by filing quarterly employment tax returns. In all but three quarters, beginning with the first quarter of 2003 through the last quarter of 2010, Baruwa failed to timely collect, account for and pay the IRS the taxes withheld from his employees’ paychecks, as well as the employer’s portion of the employment taxes. Furthermore, in all but five quarters during the same period, Baruwa failed to file NAB’s quarterly employment tax returns with the IRS in a timely manner. Additionally, since at least 2006, Baruwa has failed to file an individual income tax return in a timely manner, despite the fact that he was legally required to do so annually. The tax loss is between $200,000 and $400,000.
Former Chief Financial Officer Sentenced for Tax Evasion
On Dec. 11, 2014, in Oxford, Mississippi, William Dewey Harrison, of Sun City, Arizona, was sentenced to 51 months in prison, three years of supervised release and ordered to pay $2,312,353 in restitution to the IRS. Harrison pleaded guilty to one count of attempting to evade or defeat income tax in relation to his employment as Chief Financial Officer (CFO) of the company formerly known as Miss Eaton, Inc., a furniture manufacturer in Pontotoc, Mississippi. According to court documents, Harrison was hired by Miss Eaton, Inc. as the CFO in 2000 and worked for the company until 2008. As CFO for the company, Harrison executed a scheme to embezzle funds which resulted in the embezzlement of more than $600,000. He then failed to report as income received, and filed false and fraudulent income tax returns for the years 2004 through 2008. Additionally, Harrison failed in his fiduciary duty as CFO to properly withhold and pay employment taxes on behalf of Miss Eaton’s employees, instead diverting these funds for his own use.
Pennsylvania Man Sentenced for Tax Fraud
On Dec. 11, 2014, in Philadelphia, Pennsylvania, Victor Thach was sentenced to 46 months in prison, three years of supervised release and ordered to pay $1,337,000 in restitution to the IRS. Thach previously pleaded guilty to 16 tax-related offenses, including conspiracy to defraud the United States and failure to collect, account for, and pay over taxes. According to court documents, between 2007 and 2009, Thach operated a 250-person labor leasing agency that supplied temporary workers (including many illegal aliens) to local mail-sorting facilities. During this time period, Thach’s clients paid him more than $9.8 million for the labor he provided. Thach, in turn, paid his employees in cash and “under the table,” that is, without issuing IRS Forms W-2 or deducting any payroll taxes. Despite having a multi-million dollar payroll and counseling from two accountants separately about his tax and reporting obligations during the years in question, Thach did not file a single tax return (corporate or individual). By withholding federal income taxes and social security and Medicare taxes from the “under the table” wages, Thach caused a tax loss of at least $1,049,763. Thach also never accounted for or paid over to the IRS his employers’ matching share of the social security and Medicare taxes, totaling $454,996. Instead of paying the government, Thach spent tens of thousands of dollars gambling at high-end casinos in Atlantic City, the purchase a $59,000 Mercedes Benz SUV, made regular payments toward a $60,000 Hummer, traveled repeatedly to Cambodia, and wired more than $180,000 to accounts he controlled in Cambodia.