Date: February 28, 2020
Kristina O'Connell, Special Agent in Charge of IRS Criminal Investigation in New England, announced that Donald Cariati, Jr. of Meriden, waived his right to be indicted and pleaded guilty today in New Haven federal court to obstructing the IRS.
According to court documents and statements made in court today, Cariati owns and operates Cariati Developers Inc. ("CDI"), a snowplow and hauling business based in Wallingford. Between 2013 and 2017, Cariati paid several CDI employees with company checks asserting that they were independent contractors or subcontractors in order to evade the responsibility to withhold and pay over taxes to the IRS. However, Cariati and CDI failed to issue Forms 1099 to these "subcontractors" for particular years. Cariati also informed certain individuals that they were being paid off the books, meaning that their pay was not reported to the IRS.
In late 2015, the IRS began an audit of CDI. During the course of this audit, Cariati caused fraudulent invoices to be made available to an IRS revenue agent. The invoices were purported to have been created in 2013 and purported to substantiate that individuals were appropriately considered subcontractors.
The investigation also revealed that, in 2014, CDI paid an invoice related to products for Cariati's cigarette boat. During the IRS audit, Cariati caused his accountant to provide to the IRS a false invoice to make it appear that the purchase was a business expense and not a personal expense.
As part of his plea agreement, Cariati agrees that the tax loss in this case is between $550,000 and $1.5 million.
Cariati pleaded guilty to one count of obstructing or impeding the due administration of the Internal Revenue laws, an offense that carries a maximum term of imprisonment of three years. He is scheduled to be sentenced by U.S. District Judge Michael P. Shea on June 4, 2020.
This matter is being investigated by the Internal Revenue Service – Criminal Investigation Division. The case is being prosecuted by Assistant U.S. Attorney Jennifer Laraia.