Whatcom County contractor sentenced to two years in prison for failing to pay more than $1 million in employment taxes on employees


Date: May 9, 2023

Contact: newsroom@ci.irs.gov

Seattle, WA — An Everson, Washington, man was sentenced today in U.S. District Court in Seattle to two years in prison for failing to pay over taxes, announced U.S. Attorney Nick Brown. Between 2013 and 2019, Jay Howard Prather owned and operated Heritage General Building Contractors. He had as many as 48 employees over that period and withheld $1,095,388 in Social Security, Medicare, federal income taxes, and unemployment taxes from his employees’ paychecks. Then, instead of paying the money to federal programs as required, he used the money to buy expensive horses, exotic sportscars, and to remodel his multi-million-dollar lavish estate. At the sentencing hearing, U.S. District Judge John C. Coughenour said Prather “was warned several times that his conduct was illegal.”

“Mr. Prather stole from his employees and continued to do so even after he was confronted by those employees and by his accountant. He simply had no respect for the law or any concern about how his actions would impact his employees in the future,” said U.S. Attorney Nick Brown. “Instead, he spent money that should have gone to their Social Security and Medicare accounts on his personal luxuries: $200,000 for thoroughbred horses and more than $360,000 on three Porsche automobiles.”

According to records filed in the case, several employees confronted Prather about his failure to pay over the money he had withheld from their paychecks. In 2017, he met with an accountant who told him his tax obligation was significant. Prather sought to limit his payment to the two former employees who were threatening to sue him if he did not pay. The accountant told him that was not possible. Prather stopped communicating with the accountant and never paid the taxes owed.

Even as Prather refused to pay the taxes he owed for his employees, he used their labor, and the money he withheld, to build and remodel his luxurious estate in rural Whatcom County.

In 2020 he formed a new custom cabinet company, Artisan Builders Inc.  According to an affidavit from investigators, to date Prather has not paid the taxes he withheld from the two employees of that company.

“Mr. Prather made the wrong decision when he chose to buy horses and Porsches for his own fun over doing the lawful, right, and mandatory thing,” said Special Agent in Charge Bret Kressin, IRS Criminal Investigation (IRS:CI), Seattle Field Office. “Mr. Prather abused his employees’ trust when he spent their withholdings for his own unjust enrichment.”  

Judge Coughenour imposed a restitution obligation of $1,095,388.

The case was investigated by the Internal Revenue Service - Criminal Investigation.

The case was prosecuted by Assistant United States Attorney Erika Evans.