Malvern man sentenced to 26 months in prison for evading employment taxes


Date: May 7, 2024


CLEVELAND — Warren Kelm of Malvern, Ohio, was sentenced by United States District Judge Christopher A. Boyko to 26 months in prison and restitution of over $1.4 million payable to the IRS after pleading guilty to evading employment taxes.

According to court documents, Kelm operated Augering Technologies Inc. from 2003 through November 2016. Augering Technologies’ principal place of business was in Carrollton, Ohio. Kelm was the president of Augering Technologies and managed its daily operations. Kelm was ultimately responsible for the finances of the company including the preparing and filing of the employment tax returns and paying the employment taxes. In 2013, Kelm formed Coal Auger Pro, Inc. as the successor corporation to Augering Technologies.

Kelm filed and caused to be filed employment tax returns for the 1st quarter 2009 through 3rd quarter 2014. While Kelm filed the employment tax returns, he did not make all the required deposits. In or around 2011, IRS initiated collection efforts against Augering Technologies in an attempt to collect the outstanding federal employment tax liabilities. As part of the scheme to evade the payment of Augering Technologies’ tax liabilities, Kelm concealed and attempted to conceal assets including his ownership interest in Cola Auger. In April of 2013, Kelm had a nominee open a bank account for Coal Auger. In August of 2015, Kelm signed and filed a tax return for Coal Auger in which he indicated the nominee owned 100% of Coal Auger. In September 2015, Kelm used bank accounts for Coal Auger employees as nominee recipients of large wire transfers of funds to Coal Auger in an effort to avoid IRS levies. In April 2016, Kelm failed to disclose to the IRS Coal Auger’s receipt of approximately $1.5 million in funds from the U.S. Citizenship and Immigration Services EB-5 Immigrant Investor Program. In November 2016, Kelm executed a sham arms-length transaction purporting to sell Augering Technologies’ assets to Coal Auger, which he represented was an independent, third-party purchaser.

The investigation was conducted by IRS Criminal Investigation (CI). The case was prosecuted by Assistant U.S. Attorney Megan R. Miller.

CI is the criminal investigative arm of the IRS, responsible for conducting financial crime investigations, including tax fraud, narcotics trafficking, money-laundering, public corruption, healthcare fraud, identity theft and more. CI special agents are the only federal law enforcement agents with investigative jurisdiction over violations of the Internal Revenue Code, obtaining a more than a 90 percent federal conviction rate. The agency has 20 field offices located across the U.S. and 12 attaché posts abroad.