Category Archives: IRS CID

Owner of Home Health Companies Sentenced for Role in $20 Million Health Care Fraud Scheme

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The owner and operator of several Miami health care agencies was sentenced today to serve 120 months in prison for his role in a health care fraud scheme involving defunct home health care company Trust Care Health Services Inc.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Wifredo A. Ferrer of the Southern District of Florida; Special Agent in Charge Michael B. Steinbach of the FBI’s Miami Field Office; Special Agent in Charge Christopher B. Dennis of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Office of Investigations Miami Office; and Acting Special Agent in Charge Michael J. DePalma of the Internal Revenue Service—Criminal Investigation’s (IRS-CI) Miami Field Office made the announcement.

Roberto Marrero, 60, of Miami, was sentenced by U.S. District Judge K. Michael Moore in the Southern District of Florida.   In September 2013, Marrero pleaded guilty to conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks.

Marrero was an owner and operator of Trust Care, a Miami home health care agency that purported to provide home health and physical therapy services to Medicare beneficiaries.

Co-conspirators Sandra Fernandez Viera, 49, Patricia Morcate, 34, and Enrique Rodriguez, 59, all of Miami, have also pleaded guilty to related charges, including conspiracy to commit health care fraud and conspiracy to receive and pay health care kickbacks.   On Nov. 13, 2013, Fernandez Viera was sentenced to serve 120 months in prison; Morcate was sentenced to serve 60 months; and Rodriguez was sentenced to serve 57 months.

Together with Marrero, Fernandez Viera was an owner and operator of Trust Care.   Morcate worked at and was an investor in Trust Care.   Rodriguez served as a patient recruiter on behalf of Trust Care.

According to court documents, Marrero and his co-conspirators operated Trust Care for the purpose of billing the Medicare Program for, among other things, expensive physical therapy and home health care services that were not medically necessary and/or were not provided.

Marrero primarily controlled Trust Care and, in light of that role, oversaw the schemes operating out of the company.   Marrero was also responsible for negotiating and paying kickbacks and bribes, interacting with patient recruiters, and coordinating and overseeing the submission of fraudulent claims to the Medicare program.

Marrero and his co-conspirators paid kickbacks and bribes to patient recruiters in return for the recruiters providing patients to Trust Care for home health and therapy services that were medically unnecessary and/or not provided.  Marrero and his co-conspirators at Trust Care also paid kickbacks and bribes to co-conspirators in doctors’ offices and clinics in exchange for home health and therapy prescriptions, medical certifications and other documentation.  Marrero and his co-conspirators used these prescriptions, medical certifications and other documentation to fraudulently bill the Medicare program for home health care services, which Marrero knew was in violation of federal criminal laws.

From approximately March 2007 through at least October 2010, Trust Care submitted more than $20 million in claims for home health services.  Medicare paid Trust Care more than $15 million for these fraudulent claims.

Marrero and his co-conspirators have also acknowledged their involvement in similar fraudulent schemes at several other Miami health care agencies in addition to Trust Care with estimated total losses of approximately $50 million.   Those agencies include A&B Health Services Inc. ,  Centrum Home Health Care Inc.,  Global Nursing Home Health Inc., Lovable Home Health Services Corp., New Concepts In Health Inc., Nursemed Home Care Corp., R&M Health Care Inc.,  Ubieta Health System Inc., and Vital Care Home Health Services Inc.

The case was investigated by the FBI and HHS-OIG, with the assistance of IRS-CI, and was brought as part of the Medicare Fraud Strike Force initiative, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Southern District of Florida. This case was prosecuted by Trial Attorney A. Brendan Stewart of the Criminal Division’s Fraud Section.   Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,700 defendants who have collectively billed the Medicare program for more than $5.5 billion.   In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Iraqi-Based Construction Company Pays $2.7 Million to U.s. for Alleged False Claims in Bribery Scheme

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Iraqi Consultants and Construction Bureau (ICCB) has paid the U.S. $2.7 million to resolve allegations that it violated the False Claims Act by bribing a U.S. government official to obtain U.S. government contracts in Iraq, the Department of Justice announced today.  ICCB is a privately owned construction company headquartered in Baghdad, Iraq.

“Bribery will not be tolerated in government contracting,” said Assistant Attorney General for the Justice Department’s Civil Division Stuart F. Delery.  “We will ensure that government contracts are awarded based on merit and pursue allegations of fraudulently procured contracts wherever they occur.”

The government alleged that, from 2007 to 2008, ICCB paid bribes to Army Corps of Engineers procurement official John Salama Markus, 41, of Nazareth, Pa., to obtain information that gave it an advantage in bidding on several construction contracts with the Department of Defense in Iraq.  The contracts supported reconstruction efforts involving the Iraq war, including infrastructure and security projects and the building of medical facilities and schools.  ICCB then knowingly overcharged the U.S. for services provided under the contracts, according to the government’s allegation.

“It is offensive that anyone would see projects to promote stability, health and education in a rebuilding country as a way to make illegal cash on the side,” said U.S. Attorney for the District of New Jersey Paul J. Fishman.  “We will not abide companies paying to play in such a system.”

“The Defense Criminal Investigative Service (DCIS) is committed to protecting the integrity of the Defense acquisition process from personal and corporate avarice,” said Special Agent in Charge, DCIS Northeast Field Office Craig Rupert.  “Ensuring the proper use of U.S. taxpayers’ dollars and preventing contract fraud is in our nation’s interest and remains a priority.”

The settlement is part of a larger investigation initiated by the U.S. Attorney’s Office for the District of New Jersey.  As part of that investigation, Markus pleaded guilty on Sept. 7, 2012, to wire fraud, money laundering and failure to report a foreign bank account in connection with more than $50 million in contracts awarded to foreign companies in Gulf Region North, Iraq.  Markus was sentenced to 13 years in prison on March 12, 2013, in Newark, N.J., federal court.

The investigation is being handled by the U.S. Attorney’s Office for the District of New Jersey and the Civil Division’s Commercial Litigation Branch, in cooperation with the Defense Criminal Investigative Service, the Major Procurement Fraud Unit of the Army’s Criminal Investigation Command, the Criminal Investigative Division of the Internal Revenue Service and the Department of Homeland Security.  The claims resolved by the settlement are allegations only; there has been no determination of liability.

New York Check Cashing Company and Owner Plead Guilty for Roles in $19 Million Scheme

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Belair Payroll Services Inc. (Belair), a multi-branch check cashing company in Flushing, N.Y., and its owner, Craig Panzera, 47, pleaded guilty today for failing to follow reporting and anti-money laundering requirements for more than $19 million in transactions, in violation of the Bank Secrecy Act (BSA).   Panzera also pleaded guilty to conspiring to defraud the United States by willfully failing to pay income and payroll taxes.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney Loretta Lynch of the Eastern District of New York, Acting Director John Sandweg of U.S. Immigration and Customs Enforcement (ICE), and Chief Richard Weber of the Internal Revenue Service Criminal Investigation (IRS-CI) made the announcement.

As part of the guilty plea, Belair will forfeit $3,267,252.10, and Panzera will pay restitution in the amount of $946,841.17 to the IRS.  Sentencing for Belair and Panzera will be determined at a later date.

According to court records, from in or about June 2009 through June 2011, certain individuals presented to Belair’s manager and other employees checks to be cashed at Belair.  The checks were written on accounts of shell corporations that appeared to be health care related, but in fact, the corporations did no legitimate business.  The shell corporations and their corresponding bank accounts on which the checks were written were established in the names of foreign nationals, many of whom were no longer in the United States.

Belair accepted these checks and provided cash in excess of $10,000 to the individuals. Panzera and others at Belair never obtained any identification documents or information from those individuals.  Belair filed currency transaction reports (CTRs) that falsely stated the checks were cashed by the foreign nationals who set up the shell corporations, and in certain CTRs, Belair failed to indicate the full amount of cash provided to the individuals.  The individuals cashed more than $19 million through Belair during the course of the scheme.  Panzera and Belair willfully failed to maintain an effective anti-money laundering program by cashing these checks.

The charges in the indictment against Panzera’s and Belair’s co-defendants remain pending and are merely accusations.  Those defendants are presumed innocent unless and until proven guilty.

The cases are being investigated by agents from ICE Homeland Security Investigations and IRS-CI.  These cases are being prosecuted by Trial Attorneys Claiborne W. Porter and Kevin G. Mosley of the Criminal Division’s Asset Forfeiture and Money Laundering Section’s (AFMLS) Money Laundering and Bank Integrity Unit, Trial Attorney Darrin McCullough of AFMLS’s Forfeiture Unit, and Assistant U.S. Attorney Patricia Notopoulos of the Eastern District of New York.

The Money Laundering and Bank Integrity Unit investigates and prosecutes complex, multi-district and international criminal cases involving financial institutions and individuals who violate the money laundering statutes, the Bank Secrecy Act and other related statutes.  The Unit’s prosecutions generally focus on three types of violators: financial institutions, including their officers, managers and employees, whose actions threaten the integrity of the individual institution or the wider financial system; professional money launderers and gatekeepers who provide their services to serious criminal organizations; and individuals and entities engaged in using the latest and most sophisticated money laundering techniques and tools.

FORMER PROJECT MANAGER CONVICTED FOR ROLE IN CONSPIRACY SCHEMES INVOLVING TWO EPA SUPERFUND SITES IN NEW JERSEY

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WASHINGTON — A New Jersey jury convicted a former project manager for his  central role in conspiracies that spanned seven years and involved kickbacks in  excess of $1.5 million at two Environmental Protection Agency (EPA) Superfund  sites in New Jersey, the Department of Justice announced today.  The jury returned guilty verdicts on 10  counts charged in the indictment against Gordon D. McDonald, which was filed on  Aug. 31, 2009.

In addition to today’s conviction,  to date, eight individuals and three companies have pleaded guilty to charges  arising out of this investigation.

After a two-week trial, McDonald, a former project manager for a prime contractor, was convicted  of engaging in separate bid-rigging, kickback and/or fraud conspiracies with  three subcontractors at two New Jersey Superfund sites – Federal Creosote in  Manville, N.J., and Diamond Alkali in Newark, N.J.  He was also convicted of engaging in an  international money laundering scheme, major fraud against the United States,  accepting illegal kickbacks, committing two tax violations and obstruction of  justice. The various conspiracies took  place at different time periods from approximately December 2000 until approximately April 2007.  McDonald was acquitted on counts eight and nine involving certain fraud and kickback charges.

“Today’s guilty verdict sends a clear message that  corrupt purchasing officials will be held accountable for engaging in  fraudulent schemes designed to undermine the government’s competitive  contracting practices,” said Bill Baer, Assistant Attorney General in charge of  the Department of Justice’s Antitrust Division.   “The Antitrust Division is committed to ensuring there is fair play and competition  in our markets.”

As part of  the conspiracies, McDonald and co-conspirators at his former company accepted  kickbacks from sub-contractors in exchange for the award of sub-contracts at  Federal Creosote.  McDonald provided  co-conspirators at Bennett Environmental Inc., a Canadian-based company that  treats and disposes of contaminated soil, with bid prices of their competitors,  which allowed them to submit higher bid prices and still be awarded the  sub-contracts.  In exchange for  McDonald’s assistance, Bennett Environmental, Inc. provided him with over $1.5  million in kickback payments.

According to court documents, McDonald also  accepted kickbacks in exchange for the award of sub-contracts at the Federal  Creosote and Diamond Alkali sites from the owner of JMJ Environmental Inc., a  wastewater treatment and chemical supply company, and the co-owner of National  Industrial Supply LLC, an industrial pipes supplier.  He participated in a conspiracy with the  owner of JMJ and co-conspirators to rig bids and allocate sub-contracts at  inflated prices for wastewater treatment supplies and services at Federal Creosote.

The cleanup at Federal Creosote was  primarily funded by the EPA.  An  interagency agreement between the EPA and the U.S. Army Corps of Engineers designated that the U.S. Army Corps of Engineers hire the prime contractors at Federal Creosote.  According to a settlement with the EPA and  the New Jersey Department of Environmental Protection, Tierra Solutions was  required to fund remedial action and maintenance of Diamond Alkali.  Tierra Solutions hired the prime contractor  for the remedial action and maintenance of Diamond Alkali.

Sentencing is  scheduled for Jan. 6, 2014, before Judge Susan D. Wigenton.  To date, more than $6 million in criminal  fines and restitution have been imposed, and five individuals have been  sentenced to serve more than 10 years in total prison time.

Today’s  conviction is the result of an ongoing federal antitrust investigation being  conducted by the Antitrust Division’s New York Office, the EPA Office of  Inspector General and the Internal Revenue Service-Criminal Investigation.  Anyone with information concerning bid  rigging, kickbacks, tax offenses or fraud relating to subcontracts awarded at  the Federal Creosote Superfund site or Diamond Alkali Superfund site should  contact the Antitrust Division’s New York Office at 212-335-8000

Mastermind of $11 Million Detroit Medicare Fraud Scheme Sentenced to 50 Months in Prison

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Muhammad Shahab, the mastermind of an almost $11 million Medicare fraud scheme in Detroit, was sentenced today to 50 months in prison.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division, U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade, Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) Chicago Regional Office made the announcement.

Shahab, 53, was sentenced by U.S. District Judge Denise Page Hood in the Eastern District of Michigan.  In addition to his prison term, Shahab was sentenced to three years of supervised release and was ordered to pay more than $10.8 million in restitution, jointly and severally with his co-defendants.    Shahab pleaded guilty to one count of health care fraud in February 2010.  According to information contained in plea documents, Shahab helped finance and establish two Detroit-area home health agencies, Patient Choice Home Healthcare Inc. (Patient Choice) and All American Home Care Inc. (All American).  Shahab admitted that while operating or being associated with both home health agencies, he and his co-conspirators billed Medicare for home health visits that never occurred.         Shahab admitted that he and his co-conspirators recruited and paid cash kickbacks and other inducements to Medicare beneficiaries in exchange for the beneficiaries’ Medicare numbers and signatures on documents falsely indicating that they had visited Patient Choice and All American for the purpose of receiving physical or occupational therapy.  Shahab admitted that a large number of the beneficiaries were neither homebound nor in need of any physical therapy services.       Shahab also admitted to securing physician referrals for medically unnecessary home health services through the payment of kickbacks to physicians or individuals associated with physicians.  Shahab employed several physical therapists and physical therapy assistants to sign medical documentation needed to begin billing for home health care services, including initial payments and payments for each visit to a Medicare beneficiary.  Shahab acknowledged that he knew the physical therapists and physical therapy assistants were not actually conducting a large majority of the visits or treating a large majority of the patients, and confessed to billing and receiving payment from Medicare for services not rendered or medically unnecessary services.         Between approximately August 2007 and October 2009, Shahab and his co-conspirators at Patient Choice and All American submitted approximately $10.8 million in claims to the Medicare program for physical and occupational therapy services that were never rendered or were medically unnecessary.    This case was investigated by the FBI, HHS-OIG and the Internal Revenue Service and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan.  This case was prosecuted by Deputy Chief Gejaa Gobena, Assistant Chief Catherine Dick and Trial Attorney Niall O’Donnell of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare and Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Owner of New York Construction Company Indicted for Tax Fraud

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The Justice Department and Internal Revenue Service (IRS) announced that Tomas Olazabal, of Fresh Meadows, N.Y., was arrested today following his indictment in the U.S. District Court for the Eastern District of New York on Aug. 8, 2013, on multiple tax crimes.

According to the indictment, Olazabal owned Tupac Construction Corp., a construction company in Fresh Meadows.  As alleged in the indictment, Olazabal used check cashing services to cash a substantial number of checks paid to his construction company for services between 2007 and 2008.  He concealed his check cashing activities from his tax return preparers.  Accordingly, the gross receipts represented by the checks negotiated at the check cashers were not included as gross receipts on the company’s tax returns.

The indictment alleges that Olazabal filed false 2007 and 2008 corporate income tax returns for Tupac. Olazabal faces a potential maximum sentence of six years in prison and a potential fine of up to $500,000.

A trial date has not been scheduled.  An indictment merely alleges that a crime has been committed, and a defendant is presumed innocent until proven guilty beyond a reasonable doubt.

The case was investigated by IRS – Criminal Investigation and is being prosecuted by Trial Attorneys Mark Kotila and Steve Descano of the Justice Department’s Tax Division.

IRS Criminal Cases Filed

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Examples of Employment Tax Investigations – Fiscal Year 2013

The following examples of employment tax investigations are written from public record documents on file in the court records in the judicial district in which the cases were prosecuted.

Pennsylvania Businessman Sentenced for Tax Evasion
On July 24, 2013, in Pittsburgh, Pa., Richard D. Edwards, of Monroeville, Pa., was sentenced to 18 months in prison and three years of supervised release.  Edwards pleaded guilty to three counts of failure to pay over tax.  According to court documents, Edwards was the sole owner of the home improvement company Custom Patio Rooms.  In 2006, 2007, and 2008, Edwards failed to pay over to the IRS the federal income taxes withheld from his employees and the Federal Insurance Contributions Act taxes due and owing.

Former Owner of Employee Leasing Company Sentenced for Failing to Pay Payroll Taxes to the IRS
On July 18, 2013, Salt Lake City, Utah, Richard R. Whatley, a former owner of Alliance Staffing Management Inc. (ASM), was sentenced to 51 months in prison and ordered to pay $541,513 in restitution to the IRS. Whatley pleaded guilty in January 2013 to willfully failing to account for and pay over employment taxes. In January 2010, a federal grand jury charged Whatley with five counts of willfully failing to account for and pay over employment taxes, relating to three different employee leasing companies that he allegedly operated and controlled between the years 2001 and 2006.  The tax loss associated with Whatley’s criminal conduct during these years totaled more than $2.3 million. According to the plea agreement, during the 2002 through 2004 tax years, Whatley held an ownership interest in and had the ability to control the finances of ASM, an employee leasing company. Whatley’s control included determining the amount of employment taxes that had to be paid over to the IRS and the authority to decide which bills would be paid and which bills would not be paid. As charged in the superseding indictment, in the fourth tax quarter of 2003, Whatley caused the collection of employment taxes from ASM’s employees’ wages and then willfully failed to pay over $541,513 for the employees’ portion of employment taxes to the IRS.

Pennsylvania Man Sentenced for Theft from Employee Benefit Plan and Tax Fraud
On July 17, 2013, in Scranton, Pa., Charles Yaskulski, of Nicholson, Pa., was sentenced to 17 months in prison, two years of supervised release, and ordered to pay $548,768 in restitution. Yaskulski was convicted of theft from an employee benefit plan and failure to file an income tax return.  According to court documents, Yaskulski was the former president and majority shareholder of Eagle Warranty Corporation which marketed and sold used car warranty policies to customers in twelve states nationwide. Eagle Warranty also established a profit sharing plan, whereby company employees could make payroll-funded contributions to a company-sponsored 401(k) retirement plan. Yaskulski previously admitted to the theft of approximately $16,000 from the retirement plan in 2008 and 2009. Yaskulski also failed to file employer’s quarterly federal tax returns for Eagle Warranty for each tax quarter in 2009.

Arkansas Businessman Sentenced for Failing to Pay Federal Income Taxes
On July 1, 2013, in Fort Smith, Ark., George Avlos was sentenced to 30 months in prison, three years of supervised release and ordered to pay $291,760 in restitution to the IRS. Avlos pleaded guilty on February 27, 2013 to failing to file a federal tax return and failing to pay employment taxes. According to court documents, Avlos was the sole owner and president of LinLex Inc., a company that provided consulting services concerning Department of Transportation regulations.  Avlos was responsible for collecting, accounting for, and paying over LinLex’s payroll taxes. During 2007 and 2008, LinLex withheld payroll taxes from its employees’ paychecks but failed to make payments to the IRS. LinLex failed to account for and pay over a total of approximately $109,543 in payroll taxes. In addition, Avlos failed to file a personal income tax return for 2006, a year in which he had an income of approximately $199,489.

South Carolina Man Sentenced for Tax Evasion and Employing Illegal Aliens
On June 24, 2013 in Columbia, S.C., Ji Duan Fang, of Hanahan, S.C., was sentenced to 12 months in prison, six months in a community corrections center, and three years of supervised release for failure to pay employment taxes and harboring illegal aliens. According to court documents, Fang owned and operated Jade China Buffet, a restaurant in North Charleston, and he knowingly hired at least 14 illegal aliens to work at the restaurant.  From 2008 through 2011, Fang paid the illegal alien employees in cash and did not collect or pay employment taxes for these employees. Fang’s failure to collect and pay the employment taxes for the illegal alien employees resulted in $212,225 in unpaid taxes.

California Resident Sentenced for Employment Tax Evasion Scheme
On June 24, 2013, in Los Angeles, Calif., Jason M. Harvey, formerly of Yorba Linda, Calif., was sentenced to 24 months in prison, three years of supervised release and ordered to pay $11,738,000 in restitution for aiding in the evasion of payment of federal payroll taxes.  According to his plea agreement, Harvey, was identified as the legal owner of several payroll processing companies including Advanced Business Payroll, Inc., Global Business Outsource Solutions, Inc., and Global Consulting, Inc.  He was responsible for filing correct payroll tax returns, collecting payroll tax and remitting payroll tax withheld from employees of the client’s businesses to the IRS and State of California. During the period January 1, 2004 through December 31, 2006, Harvey failed to pay over $10 million in payroll taxes that were actually due by the Global companies for the wages paid to employees, and failed to file some of the payroll tax returns required to be filed with the IRS. On February 4, 2013 Michael Harvey, Jason Harvey’s father, was sentenced to 30 months in prison, three years of supervised release and ordered to pay $15,177,106 in restitution. Michael Harvey, pleaded guilty to evading payment of over $15 million to the IRS, admitting that he caused the companies to not honor the levies, and aided Jason Harvey to cause those companies to not honor the IRS levies.  Another co-defendant Denise Browning was sentenced to 42 months in prison and one year of supervised release after being found guilty of two counts of aiding and assisting in the preparation of false payroll tax returns.

Payroll Company Owner Sentenced in Tax Case
On June 21, 2013, in Cincinnati, Ohio, Robert Sacco was sentenced to 78 months in prison, three years of supervised release and ordered to pay $26,729,098 in restitution jointly with another defendant. Sacco pleaded guilty on October 26, 2012 to one count each of conspiracy to defraud the United States by impeding the IRS, money laundering and tax evasion.  According to court documents, Sacco was the owner and chairman of the board of Paysource, a Dayton-based professional employer organization which provided services that enabled business owners to cost-effectively outsource the management of human resources, employee benefits, payroll and workers’ compensation and other strategic services. Sacco and others conspired to avoid the payment of federal employment taxes owed by Paysource for 2007 through 2009 and concealed from the IRS the legitimate tax liabilities the company owed. Sacco directed co-conspirators to prepare fraudulent IRS forms claiming that the wages paid by the company and the resulting tax liabilities were significantly lower than the wages the company actually paid.

Former Toy Company Owner Sentenced for Failure to Pay Employment Taxes
On June 12, 2013, in St. Paul, Minn., Kim Robert Calkins, of Eden Prairie, Minn., was sentenced to 12 months and one day in prison for failure to pay federal employment taxes. Calkins pleaded guilty on September 26, 2012. In his plea agreement, Calkins admitted that from the third quarter of 2008 to the final quarter of 2010, he failed to pay to the IRS the employment taxes withheld from employees of Princess Soft Toys. Despite receiving regular notices that the employment taxes were still due, Calkins neglected to pay the amount owed. The total tax loss in this case is $852,361.

Tennessee Man Sentenced on Tax Evasion Charges
On June 3, 2013, in Greeneville, Tenn., Paul Adams, of Kingsport, Tenn., was sentenced to 36 months in prison, three years of supervised release and ordered to pay $2,535,745 in restitution. According to court documents, Adams formed a professional employer organization, employing 500 employees for 23 client companies. Adams performed clerical services for the 23 companies, including withholding federal payroll taxes and filing federal payroll tax returns. During a 17-month period, Adams calculated and collected the correct amount of withholding and payroll taxes, but reported and paid a much smaller number to the Internal Revenue Service and the Social Security Administration. Adams pocketed more than $2.5 million paid by his client companies and the employees.

Former Owner of Oklahoma Pool Company Sentenced for Tax Fraud
On May 28, 2013, in Oklahoma City, Okla., Theodore Michael Zachritz, of Nichols Hills, Okla., was sentenced to 18 months in prison, three years of supervised release and ordered to pay $461,363 in restitution to the IRS. Zachritz pleaded guilty in January 2013 to one count of willfully failing to collect and pay over to the IRS federal income taxes.  According to court documents, Zachritz and his wife owned and operated Lifestyle Pools, LLC in Oklahoma City. As owner of the company, Zachritz deducted and withheld more than $290,000 in federal income taxes, Social Security taxes, and Medicare taxes from the wages of Lifestyle Pools employees. Zachritz failed to pay those taxes to the IRS.

Oklahoma Bookkeeper Sentenced for Embezzlement and Tax Evasion
On May 6, 2013, in Oklahoma City, Okla., Carolyn Dawson was sentenced to 24 months in prison, three years of supervised release and ordered to pay $1,843,674 in restitution for embezzlement and evading federal payroll taxes. According to court documents, Dawson worked as a bookkeeper for a wholesaler of greenhouse supplies where she maintained payroll, prepared payroll tax returns, and paid withheld taxes to the IRS. From January 2007 through November 2011, Dawson defrauded the business by paying personal credit card expenses from the business bank account. Dawson also evaded federal payroll taxes by failing to file a 2010 payroll tax return for the company, failing to make payroll withholding payments to the IRS, and altering the books and records of the company to conceal her failure to make withholding payments.

Comptroller of New York Payroll Services Company Sentenced for $20 Million Fraud
On April 12, 2013, in Sacramento, Calif., Kerry Seaman, of Lake Ronkonkoma, N.Y., was sentenced to 44 months in prison and ordered to pay $19,141,618 in restitution. Seaman pleaded guilty on November 19, 2010 to wire fraud. According to court documents, Seaman was the comptroller for Ingentra HR Services Inc., a payroll services corporation in Hauppauge, N.Y.  Ingentra, then known as Humanic Solutions Inc, was hired by Sacramento County in late 2004 to process the payrolls for Sacramento County’s Special Districts. As part of the payroll services, Ingentra calculated the tax payments for the clients and the clients’ employees and then transmitted the payments to the state and federal tax authorities. Ingentra was responsible for paying the income tax withholdings to the IRS and to file the Employer’s Quarterly Federal Tax Form (Form 941) with the IRS on behalf of the clients. From 2005 until April 2010, Seaman and co-defendant Albert Cipoletti defrauded the County of Sacramento Special Districts and two other companies of the tax withholdings intended to be paid to the IRS. Ingentra collected the correct amount from the clients but underreported to the IRS the amount owed, and diverted the difference to Ingentra’s operating account for Ingentra’s own use. Cipoletti and Seaman sent funding letters to the clients that correctly calculated payroll and federal tax withholdings for the clients’ employees, and the clients wire transferred funds to Ingentra to pay both the payroll and taxes. Cipoletti and Seaman then filed false Forms 941 with the IRS, understating the true employee tax withholdings for these clients. Cipoletti and Seaman wrongfully diverted in excess of $20 million in tax withholdings from the clients that should have been remitted to the IRS on behalf of the clients and the clients’ employees. Cipoletti was sentenced in May 2011 to 78 months in prison and ordered to pay $19,141,618 in restitution.

Kentucky Man Sentenced for Attempting to Evade Paying Taxes and Wire Fraud
On April 12, 2013, in Lexington, Ky., David Byron was sentenced to 41 months in prison and ordered to pay $688,530 in restitution for wire fraud and attempting to evade paying taxes. According to court documents, Byron admitted that from 2006 through April 2010 he devised a scheme to defraud at least seven clients of his bookkeeping business. Byron told the clients he would facilitate payment of their taxes owed to the IRS and other state and federal government agencies. In reality, Byron wired money from their bank accounts to his bank account and used the money to supplement his lifestyle.

Missouri Business Owner Sentenced for Failing to Pay Taxes
On April 11, 2013, in Springfield, Mo., Paul Ray Rose Jr., of Highlandville, Mo., was sentenced to 27 months in prison and ordered to pay $586,739 in restitution to the IRS. On November 26, 2012, Rose pleaded guilty to two counts of failing to pay taxes. Rose owned and operated Highlandville-based Newby Enterprises, dba J.B. Enterprises, Inc. According to court documents, from 2006 to 2009, Rose withheld a total of $37,521 in employment taxes from his employees’ paychecks, but willfully failed to pay over the taxes to the IRS. Rose also failed to file individual income tax returns from 2006 to 2009, thereby failing to report income earned from his business. Based on more than $3.2 million in gross revenues and more than $1.7 million in gross profit for the years 2006 through 2009, Rose owed the IRS $375,631 in unpaid income tax.

North Carolina Couple Sentenced for Tax Fraud Conspiracy and Health Care Fraud 
On April 10, 2013, in Greenville, N.C., John Curtis Alspaugh was sentenced to 40 months in prison, three years of supervised release and ordered to pay $1,614,003 in restitution. Helen Blue Alspaugh was sentenced to 18 months in prison, three years of supervised release and ordered to pay $1,392,115 in restitution. On January 8, 2013, the Alspaughs pleaded guilty to one count of tax fraud conspiracy and John Alspaugh also pleaded guilty to one count of health care fraud. According to court documents, John and Helen Alspaugh formed Basic Home Health Care, Inc., a home health care business located in Dunn, N.C. Basic Home Health Care, Inc. provided personal care services to people who were homebound and needed assistance with their activities of daily living and instrumental activities of daily living.  The Alspaughs collected employment taxes from employees and failed to pay over the taxes to the IRS, resulting in a tax liability in excess of one million dollars for the tax periods beginning in March 2003 and ending in December 2010.

Businessman Sentenced for Failure to Pay Payroll Taxes and Bank Fraud
On April 4, 2013, in Columbus, Ohio, Robert Jeffrey Johnson was sentenced to 15 months in prison, three years of supervised release and ordered to pay $1,334,052 in restitution to the IRS and $252,500 in restitution to the victim financial institution. Johnson pleaded guilty on September 27, 2012 to failure to pay employee payroll taxes, bank fraud and concealing documents in a bankruptcy proceeding. According to court documents, Johnson, president of Smith & Johnson Construction Company, borrowed $20 million from lenders in 2004 and 2005 to fund company operations. However, during 2004 and 2005, Johnson used his position at Smith & Johnson to have about $7 million transferred to him and to business entities controlled by him. Part of Johnson’s scheme included securing a line of credit to pay off any outstanding accounts and the end of the fiscal year to make it appear that he, or business entities he controlled, owed no money to Smith & Johnson. Johnson also purchased vehicles with funds provided by Smith & Johnson, then sold the vehicles and had the proceeds sent to himself or his representative. When the construction company filed for bankruptcy in 2006, Johnson filed false documents, failed to submit all financial records and hid assets from the bankruptcy trustee. In addition, Johnson defrauded the IRS in the amount of $156,008 in the first quarter of 2006 by withholding funds from employees’ paychecks for taxes and failing to pay the funds to the IRS.

Ohio Business Owner Sentenced for Employment Tax Fraud
On April 3, 2013, in Columbus, Ohio, Charles E. Watts Jr., of Jeffersonville, Ohio, was sentenced to 12 months and one day in prison, three years of supervised release and ordered to pay $1,443,048 in restitution to the IRS. Watts pleaded guilty on November 2, 2011 to attempting to evade and defeat the payment of employment taxes. According to court documents, from 1998 through 2008, Watts was the owner and operator of Dimensional Construction, T&R Electric Works, Watts Electric Co., and Watts Electric Company of Ohio, LLC. Beginning in the fourth quarter of 2004, Watts evaded $1,443,048 in employment taxes for 12 tax periods. Watts used a substantial portion of the funds to purchase numerous assets and pay other personal expenses. During 2004, Watts evaded paying employment taxes by establishing a business name, operating under that name, incurring employment tax obligations, then terminating the business only to establish another one under a different name and Employer Identification Number. Watts opened several business bank accounts utilizing these various business names, and used those accounts to funnel employees’ withholdings from account to account in order to elude IRS Collections’ efforts. In addition, Watts established a shell company, Valley Construction & Property, Inc., and used the company bank account to pay personal living expenses and to purchase major assets. Watts placed multiple assets in the name of Valley Construction & Property, Inc. in order to disguise the fact that he was the true owner of these assets. Watts also recruited several individuals who helped him conceal various assets from the IRS by placing them in their own name. These assets included real estate, luxury vehicles, and a pleasure boat.

Husband and Wife Sentenced for Various Tax Crimes
On March 25, 2013, in Houston, Texas, James R. Dixon was sentenced to 33 months in prison, three years of supervised release and ordered to pay $1,397,511 in restitution. On February 27, 2013, Sharon C. Dixon was sentenced to 11 months in prison and ordered to pay $183,801 in restitution. The Dixons both pleaded guilty in October 2012. James Dixon pleaded guilty to one count of tax evasion. Sharon Dixon pleaded guilty to two counts of willfully failing to file tax returns. According to court documents, the Dixons owe $890,000 in individual income taxes from their 2005 through 2008 income tax years, plus more than $700,000 in unpaid employment taxes of a company for which James Dixon had the duty to pay over to the IRS.

New York Tax Preparer Sentenced for Tax Evasion and Bank Fraud
On February 13, 2013, in Buffalo, N.Y, Vincent P. Mangione, of North Tonawanda, N.Y., was sentenced to 30 months in prison and three years of supervised release for tax evasion and bank fraud. He was also ordered to pay more than $800,000 in restitution. According to court documents, Mangione operated MTS Payroll and Mil-Sher Tax Services, Inc. The companies provided payroll services and bookkeeping and tax preparation for individuals and businesses. Between December 2002 and April 2007, Mangione, without the knowledge of the businesses he represented, filed fraudulent quarterly federal tax returns. In order to avoid detection, the defendant obtained the actual amount of withholding tax the businesses owed to the IRS. Mangione then filed a false quarterly tax return that under-represented the amount owed to the IRS and kept the difference for his own benefit.

Owner of Japanese Restaurant Sentenced for Tax Crimes
On January 30, 2013, in San Francisco, Calif., Michael Chen, the owner of Fune Ya Japanese Restaurant, was sentenced to 33 months in prison, three years of supervised release and ordered to pay $459,105 in restitution. Chen was convicted by a jury on March 27, 2012, on filing false tax returns, failure to file tax returns, and mail fraud. A federal jury found that Chen filed a false 2004 U.S. income tax return for an S Corporation (Form 1120S) for his restaurant, failed to file corporate income tax returns for the restaurant for 2005 and 2006 and filed nine false employer’s quarterly federal tax returns (Forms 941) with the IRS. He used the U.S. mail to file nine false quarterly sales and use tax returns with the California Board of Equalization. Evidence at trial showed that Chen maintained detailed records of Fune Ya’s daily receipts in twenty-six boxes marked “Seasoned Octopus.”  The boxes were stored in a crawl space beneath the restaurant floor. The cash sales shown on Fune Ya’s receipts were not reported to the IRS. The evidence also showed that Chen maintained an encrypted Excel spreadsheet documenting $1,910,803 in sales, while he reported $450,165 in sales to the California Board of Equalization, and $65,738 in sales to the IRS. Chen also paid Fune Ya employees cash wages totaling $548,919 for the 2004 through 2006 tax years. Employees received cash wages in white envelopes each payday. Chen failed to include these cash wages on the quarterly payroll tax returns (Forms 941) filed with the IRS.

Owner of Maryland Business Sentenced for Failing to Pay Employment Taxes
On January 23, 2013, in Greenbelt, Md., Alphonso Tillman, of Fort Washington, Maryland, was sentenced to 24 months in prison and three years of supervised release, for failing to account for and pay over employment taxes. Tillman was also ordered to pay restitution of $2,205,991. According to his plea agreement, Tillman was the president and sole owner of Remote Surveillance Technology Solutions, Inc. (RSTS), and its successor, Remote Surveillance Technology Services, LLC, (RSTServ). The companies were headquartered in Landover, Maryland, and provided security guards to protect commercial and residential properties in Maryland, Virginia, Pennsylvania and the District of Columbia. RSTS and RSTServ withheld taxes from their employees’ paychecks, which the companies were required to pay over to the IRS on a periodic basis. Tillman failed to file the required forms or pay the payroll taxes due for RSTS and RSTServ, with the exception of payments made by RSTS to the IRS because of IRS collection efforts.  The total amount of tax loss resulting from Tillman’s failure to pay taxes owed by RSTS and RSTServ is $2,205,991.

CEO and CFO of Assisted Living Facility Chain Sentenced for Tax Fraud
On January 16, 2013, in Wilmington, N.C., Ronald E. Burrell, former chief executive officer (CEO) of Caremerica Inc., and Michael R. Elliott, former chief financial officer (CFO) of Caremerica Inc., were each sentenced to 60 months in prison and ordered to pay over $4.8 million in restitution. Burrell, of Wilmington, N.C., pleaded guilty to conspiracy to defraud the IRS on January 3, 2012.  Elliott, of Loris, S.C., pleaded guilty to conspiracy to defraud the IRS on July 18, 2012. According to court documents, Burrell and Elliott co-owned and operated a chain of assisted living facilities in North and South Carolina. Burrell and Elliott were the corporate officers responsible for ensuring that the Caremerica companies collected, reported and paid over federal employment taxes to the IRS. The Caremerica companies accrued more than $4.5 million in employment tax liabilities between approximately 2003 and 2006. Burrell and Elliott filed, or caused to be filed, false IRS forms that reported full payment of the employment taxes due, when in fact only a small fraction of the taxes, or none at all, were paid. Additionally, Burrell and Elliott took active steps to conceal information from the IRS, specifically, the sale proceeds of a company in which they owned a majority interest. As a result of his concealment efforts, Burrell deceived the IRS into accepting a $29,000 settlement on a $300,000 personal tax liability and opened another assisted living facility with the proceeds. Burrell and Elliott then filed false 2005 federal income tax returns that failed to report the proceeds. Elliott and Burrell also obstructed justice by making false statements under oath in bankruptcy proceedings and in IRS disclosure forms.

Former Owner of Xpress Flex, Inc. and Payroll America, Inc. Sentenced for Fraud and Filing a False Tax Return
On January 9, 2013, in Boise, Idaho, Michael Wayne Davis, II, of Raleigh, North Carolina, formerly of Eagle, Idaho, was sentenced to 51 months in prison, three years of supervised release and ordered to pay $954,640 in restitution to Xpress Flex victims and $45,290 to the IRS for the tax loss. Davis pleaded guilty on September 10, 2012 to wire fraud and filing a false tax return. According to court documents, in 2009 and 2010, Davis owned and operated Xpress Flex, Inc., a Boise, Idaho, company that administered, on behalf of employer-clients, flexible benefits plans for tax-free, qualified benefits, such as health care and dependent care. Xpress Flex received monetary contributions from its employer-clients of pre-tax withholdings from their employees’ paychecks. According to court documents, Davis misappropriated $954,640 of Xpress Flex client funds and used them to pay personal credit card charges and the business expenses of his other company, Payroll America, Inc. Court documents also showed that from 1994 through 2009, Davis owned and operated Payroll America in Boise, Idaho. Payroll America provided payroll administration and payroll tax filing services to its employer-clients. Pursuant to contract documents, employer-clients would deposit sufficient funds with Payroll America to meet their payroll and payroll tax obligations, which Payroll America would pay when they came due. According to court documents, in March and April 2007, Davis misappropriated $2 million of Payroll America employer-client funds, wired them into his E*Trade brokerage account, and then invested the funds in the stock market. Davis’ E*Trade investments generated approximately $192,436 in capital gains income. According to court documents, Davis wired this money into his and his wife’s personal checking account. The wire transfer was annotated “E-Trade Gains.” However, Davis intentionally failed to report capital gains income from E*Trade investments on his 2007 or 2008 tax returns, causing a tax loss of $45,290.

Wisconsin Woman Sentenced for Failure to Pay Federal Payroll Taxes
On January 4, 2013, Lisa Bartz Vanden Elzen, of DePere, Wis., was sentenced to 12 months and one day in prison for failing to pay federal payroll taxes over to the Internal Revenue Service. According to court records, during the period from July 2005 through December 2010, Bartz Vanden Elzen failed to pay more than $193,000 in payroll taxes withheld from the wages of employees of Dairy Transport and also failed to pay to the IRS the employer’s matching share of these payroll taxes, which totaled $81,000. Bartz Vanden Elzen is required to make full restitution to the IRS in the amount of approximately $274,000.

Operator of Payroll Companies Sentenced for Fraud and Money Laundering Crimes 
On January 3, 2013, in Greensboro, N.C., Arthur S. Weiss, of Winston-Salem, N.C., was sentenced to 185 months in prison for employment tax fraud and other crimes.  Weiss was also ordered to pay more than $7 million in restitution to numerous victims, including the IRS, the North Carolina Department of Revenue, and former clients. Weiss pleaded guilty to charges of wire fraud, bank fraud, money laundering, and tax obstruction on October 5, 2012. According to court documents, Weiss operated professional employer organizations, which provided payroll-related services to client companies. For his client companies, Weiss agreed to pay the employees, withhold and remit federal and state taxes, prepare and file the federal and state employment tax returns, and provide workers compensation insurance (WCI). Weiss did pay the employees and withheld the employment taxes, but he failed to remit the employment taxes, keeping them for his personal use. From 2004 to 2012, Weiss failed to file employment tax returns and failed to pay over to the IRS employment taxes in excess of $4 million. According to court documents, Weiss used a portion of his fraud proceeds to purchase expensive jewelry and cars.

World Health Alternatives CEO Sentenced for $41 Million Fraud Scheme
On December 4, 2012, in Pittsburgh, Pa., Richard E. McDonald was sentenced to 130 months in prison and three years of supervised release. McDonald pleaded guilty in April 2012 to charges of wire fraud, securities fraud, willful certification of false statements to SEC, failure to pay over payroll taxes, and income tax evasion. According to information presented to the court, in 2003, McDonald became the President, Principal Financial Officer, Principal Accounting Officer and Chairman of the Board of Directors of World Health Alternatives, Inc. (WHA). Around June 2004, McDonald also became the Chief Executive Officer (CEO) of WHA. Between February 2003 through August 15, 2005, McDonald defrauded WHA and its investors. He transferred funds from WHA to his personal bank account and other accounts under his control. McDonald also manipulated the financial records and statements of WHA by understating the amount of unpaid payroll taxes of WHA and its subsidiaries, and by overstating the amount of loans purportedly made by him to WHA. In addition, McDonald stole money from WHA by directing purchasers of newly issued shares to transfer the funds for the shares to accounts under McDonald’s control. McDonald stole approximately $6 million, and then spent the money on himself. In his capacity as CEO of WHA, in WHA’s financial statements, McDonald understated the actual number of outstanding WHA shares.  This was a false representation to the SEC, WHA shareholders, and prospective purchasers of WHA stock. The fraudulent understatements of the number of outstanding WHA shares falsely overstated WHA’s earnings per share, and thereby inflated the apparent market value of WHA stock. As a result of McDonald’s fraudulent conduct, WHA shareholders lost $41 million. McDonald also failed to report the funds he had fraudulently obtained from WHA and its shareholders on his personal tax returns. Finally, McDonald failed to pay over to the IRS the payroll taxes which WHA had withheld from its employees.

Ohio Businessman Sentenced for Employment Tax Fraud
On November 30, 2012, in Cincinnati, Ohio, Charles C. Painter, of Dayton, Ohio, was sentenced to 15 months in prison and ordered to pay $11,802,748 in restitution.  On February 17, 2012, Painter pleaded guilty to tax fraud. According to court documents, Painter was employed as the Chief Executive Officer and President of Paysource, Inc., a payroll company. Painter willfully aided and assisted in the preparation and filing of a false corporate income tax return with the IRS for the third quarter of 2007. The tax return fraudulently stated that the total wages Paysource II, Inc. paid to employees was $2,441,566 and as a result, Paysource II, Inc. incurred an employment tax liability of $603,532. Paysource II, Inc. actually paid $6,630,667 in total wages to its employees and incurred an actual employment tax liability of $1,710,688.

Owner of Washington Roofing Company Sentenced for Employment Tax Evasion
On November 29, 2012, in Seattle, Wash., Bruce H. Sprague, owner of Bruce’s Roofing in Enumclaw, Washington, was sentenced to 24 months in prison, three years of supervised release and ordered to pay $1,179,761 to the IRS.  In July 2012, Sprague pleaded guilty to paying a portion of his employees’ wages in cash from 2005 through 2008 and to not collecting employment taxes including Social Security, Medicare and income tax withholding from the cash wages. According to his plea agreement, Sprague informed his employees in early 2005 that they would receive a portion of their wages in cash. The cash payroll was about fifty percent of each employee’s pay. No payroll taxes were collected on the cash portion of the employees’ pay. By paying in cash and not reporting the wages, Sprague avoided approximately $1,179,761 in employment taxes for 2006 through 2008. Even as he was failing to collect and pay over the employment taxes, Sprague was taking more than $3.9 million in wages and profits from the business for 2005 through 2008.

Former CEO Pennsylvania Business Sentenced on Tax Charges
On November 27, 2012, in Erie, Pa., Frederick Zurn was sentenced to 54 months in prison and ordered to pay $278,323 in restitution to the IRS on his conviction of conspiracy to commit wire fraud and violations of federal income tax laws. According to information presented in court, Zurn was the CEO and President of Erie Copy Products, an office equipment company based in Erie, Pennsylvania. He conspired with the Vice President of Finance and others to submit forged lease documents to banks and financing companies which listed new copy equipment. They would then either deliver used copy equipment to the customer, no equipment at all or deliver equipment that the customer never agreed to lease. The conspiracy resulted in victim losses of more than $2.5 million. In addition, from 2008 through 2011, Zurn failed to make payroll tax payments to the Internal Revenue Service on behalf of his employees at Erie Copy Products.

Maryland Contractor Sentenced for Tax Evasion
On November 27, 2012, in Baltimore, Md.. Randy Benjamin Wells, of Reisterstown, Maryland, was sentenced to 13 months in prison and three years of supervised release for tax evasion. Wells was also ordered to pay restitution of $349,588. Wells paid $74,404 to the IRS prior to sentencing. According to his guilty plea, from 2005 through 2009, Wells operated Wells Contracting and Demolition Company, Inc., Triple R Contractors, Inc., and Gryphon Contracting, Inc. Although Wells hired a tax preparer to prepare his individual tax returns for 2005 through 2009, Wells failed to file the income tax return with the IRS resulting in approximately $196,200 in taxes owed. Wells used several methods in an effort to conceal his income such as purchasing personal items using funds held in a company account.  During this same time, Wells failed to pay employment taxes for the employees working for his companies. The tax loss as a result of Wells’ actions resulted in a total of $227,792 in employment taxes owed.

Massachusetts Businessman Sentenced for Tax Evasion and Conspiracy to Obstruct and Impede the IRS
On October 17, 2012, in Boston, Mass., Gary Alcock, of Westborough, Mass., was sentenced to 14 months in prison and ordered to pay $515,518 in restitution. Alcock pleaded guilty on December 9, 2011, to charges of tax evasion, conspiring to defraud the United States and willfully failing to file tax returns. On April 2, 2012, Charles Adams, Catherine Floyd and William Scott Dion were convicted by a jury of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme doing business as Contract America. Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal subscriber income and assets from the IRS. According to information presented in court, Alcock owned and operated a trash hauling business called G&K Trucking, as well as a landscaping business called Bark, Mulch and Loam. Between 2001 and 2004, Alcock set up a nominee company called “Alex Management” to divert and hide business receipts and help his businesses fraudulently “disappear” on paper to evade IRS assessments and collection activity. Alcock also used Contract America to pay his employees “under the table” without withholding or paying Social Security, Medicare and income taxes. Dion was previously sentenced to 84 months in prison, Floyd to 60 months in prison, and Adams to 48 months.

Former Owner of Paving Business Sentenced for Failure to Pay Payroll Taxes
On October 12, 2012, in Boston, Mass., William E. Belleville, of Groton, was sentenced to 18 months in prison, one year of supervised release and ordered to pay $460,000 in restitution for failing to pay payroll taxes collected from his employees. On April 10, 2012, Belleville pleaded guilty to conspiracy and tax evasion charges. According to court documents, Belleville was the former owner of a paving and plowing company, Mass. Paving. From 1993 to 2006, he withheld payroll and income taxes from his employees’ wages, but failed to remit those sums, totaling approximately $460,000, to the Internal Revenue Service.

Former Owner of Sewing Company Sentenced for Payroll Tax Violations
On October 12, 2012, in New York, N.Y., Dong Sun Mun, the former owner and operator of Match Fashions Inc., was sentenced to 36 months in prison and three years of supervised release for his role in a scheme to evade payroll taxes and for jumping bail. Mun was also ordered to pay more than $304,000 in restitution to the IRS. According to the court documents, Mun owned and operated Match Fashions, a Manhattan company that did sewing work for couture companies. From 2004 through 2006, Mun cashed many of the checks he received from customers at check-cashing establishments rather that depositing them into bank accounts. Mun used the cash to pay Match Fashions’ employees off the books to evade IRS reporting requirements. He also did not withhold or remit to the IRS payroll taxes for his employees. Mun paid nearly $2 million in cash wages and did not pay over $304,000 in payroll taxes. Mun was originally scheduled to be sentenced on the tax charges in January 2011. Shortly before that sentencing date, Mun fled to Vietnam and Korea. He was subsequently arrested when he attempted to enter Canada.

Father and Son Sentenced on Tax Charges
On October 3, 2012, in Columbus, Ohio, Eric J. McEvoy was sentenced to three years probation and ordered to pay $16,677 in restitution to the IRS. Robert McEvoy was sentenced on September 27, 2012, to 18 months in prison, three years of supervised release and ordered to pay $702,429 in restitution to the IRS. On June 13, 2012, Eric McEvoy pleaded guilty to three counts of income tax evasion and Robert McEvoy pleaded guilty to one count of conspiracy to impede and impair the lawful functions of the IRS. According to court documents, Robert McEvoy, an un-enrolled tax preparer, owned and operated Capital City Accounting, a payroll servicing company. As a payroll company, Capital City Accounting issued payroll checks, prepared payroll tax returns and made federal tax deposits on behalf of its clients.  Beginning in 2006, Eric McEvoy was employed by Capital City Accounting and assisted his father with the payroll process. Capital City Accounting billed its clients for the gross amount of their payroll, payroll taxes and fees. When clients made payments to Capital City Accounting, the payments were deposited into a Capital City Accounting bank account. Robert and Eric McEvoy failed to forward all employment taxes received from clients to the IRS. They diverted funds from the payroll account and used those funds to pay Capital City business expenses, Eric McEvoy’s personal living expenses, and for cash withdrawals. The McEvoys then either prepared and filed false Employer’s Quarterly Federal Tax Returns (IRS Forms 941) or failed to file the forms on behalf of its clients. Eric McEvoy intentionally failed to report over $66,000 income on his federal income tax returns for the 2006, 2007 and 2008 tax years.

Florida Lawn Service Owner Sentenced for Employment Tax Fraud and Filing a False Tax Return
On October 2, 2012, in Miami, Fla., Michael J. Cioffi, of Loxahatchee, Florida, was sentenced to 24 months in prison, three years of supervised release and ordered to pay $537,809 in restitution to the IRS. According to the criminal information and plea documents, Cioffi was the sole owner and operator of Mike Cioffi Lawn Service, in Loxahatchee.  Cioffi’s business specialized in large commercial contracts and employed approximately thirty employees per quarter between January 2005 and December 2006. Documents filed with the court show that for each quarter during 2005 and 2006, Cioffi paid wages to his employees by check, but knowingly failed to collect and truthfully account for or pay to the IRS any FICA or income taxes due and owing to the United States on these wages. Cioffi also did not file any of the required Employer Quarterly Tax Returns, Forms 941, for this period with the IRS. Additionally, for tax year 2006, Cioffi willfully filed a United States Individual Income Tax Return, Form 1040, on behalf of himself and his spouse which falsely reported that the gross receipts for Mike Cioffi’s Lawn Service were $782,437, when Cioffi knew that gross receipts were actually more than $2 million.

Michigan Physical Therapist Assistant/home Health Agency Owner Pleads Guilty for Role in Medicare Fraud Scheme

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A greater Detroit-area physical therapist assistant – who was also an owner of a home health agency and a patient recruiter – pleaded guilty today for his role in a $22 million home health care fraud scheme.

Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office; and Special Agent in Charge Lamont Pugh III of the Chicago Regional Office of the U.S. Department of Health and Human Services’s Office of Inspector General (HHS-OIG) made the announcement.

Syed Shah, 51, of West Bloomfield, Mich., pleaded guilty before U.S. District Judge Bernard A. Friedman in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  At sentencing, scheduled for Nov. 19, 2013, Shah faces a maximum penalty of 10 years in prison.

According to information contained in plea documents, Shah, a licensed physical therapist assistant, admitted that beginning in or around October 2008 and continuing through approximately September 2012, he conspired with others to commit health care fraud by billing Medicare for home health care services that were not actually rendered and/or not medically necessary.  Shah admitted that he began working in approximately October 2008 for Prestige Home Health Services, Inc., a home health agency located in Troy, Mich., owned by alleged co-conspirators.  His co-conspirators at Prestige paid him kickbacks in exchange for his obtaining the information of Medicare beneficiaries, which the co-conspirators then used to bill Medicare for services that were not provided and/or were not medically necessary.  Shah and his co-conspirators then created fictitious therapy files appearing to document physical therapy services provided to Medicare beneficiaries, when in fact no such services had been provided and/or were not medically necessary. Shah admitted that his role in creating the fictitious therapy files was to sign documents and progress notes indicating he had provided physical therapy services to particular Medicare beneficiaries, when in fact he had not.  Shah admitted to knowing that the documents he falsified were used to support false claims billed to Medicare by his co-conspirators at Prestige.

In his plea, Shah also acknowledged that in approximately August 2009, he became an owner of Royal Home Health Care, Inc., a home health agency located in Troy, Mich., along with other co-conspirators.  He and his co-conspirators at Royal billed Medicare for home health visits that never occurred and were not medically necessary.  Shah and his co-conspirators paid kickbacks to Shah and other patient recruiters in exchange for Medicare beneficiary information, which was then used to bill Medicare for services that were not provided and/or were not medically necessary.  Shah admitted that he and his co-conspirators created fictitious therapy files, reflecting services that had not been provided and/or were not medically necessary.  He knew the documents he falsified would be used to support false claims by Royal to Medicare for home health services.

Shah submitted or caused the submission of claims to Medicare for services that were not medically necessary and/or not provided, which in turn caused Medicare to pay approximately $5,925,843. According to the indictment, two additional home health agencies were involved in the alleged conspiracy. In total, the four home health agencies at the center of the indictment received more than $22 million from the Medicare program.

This case was investigated by the FBI, HHS-OIG and IRS Criminal Investigation, brought as part of the Medicare Fraud Strike Force, and supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. It is being prosecuted by Trial Attorney Niall M. O’Donnell of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.

Three Former UBS Executives Sentenced to Serve Time in Prison for Frauds Involving Contracts Related to the Investment of Municipal Bond Proceeds

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Three former financial services executives were sentenced today in U.S. District Court for the Southern District of New York for their participation in frauds related to bidding for contracts for the investment of municipal bond proceeds and other municipal finance contracts, the Department of Justice announced.

  Peter Ghavami, Gary Heinz and Michael Welty, all former UBS AG executives, were convicted on Aug. 31, 2012, after a five-week trial for their roles in the frauds.  They were sentenced today by U.S. District Court Judge Kimba Wood.  Ghavami was sentenced to serve 18 months in prison and to pay a $1 million criminal fine;  Heinz was sentenced to serve 27 months in prison and to pay a $400,000 criminal fine; and  Welty was sentenced to serve 16 months in prison and to pay a $300,000 criminal fine.

“For years, these executives corrupted the competitive bidding process and defrauded municipalities across the country for important public works projects,” said Scott D. Hammond, Deputy Assistant Attorney General of the Antitrust Division’s criminal enforcement program. “The division will continue to prosecute those who subvert and corrupt competitive markets for personal profit.”

According to evidence presented at trial, while employed at UBS, Ghavami, Heinz and Welty participated in multiple fraud conspiracies and schemes with various financial institutions and with a broker, at various time periods from as early as March 2001 until at least November 2006.  These financial institutions, or providers, offered a type of contract – known as an investment agreement – to state, county and local governments and agencies, and not-for-profit entities, throughout the United States. The public entities were seeking to invest money from a variety of sources, primarily the proceeds of municipal bonds that they had issued to raise money for, among other things, public projects. Public entities typically hire a broker to assist them in investing their money and to conduct a competitive bidding process to determine the winning provider.

At trial, the Department of Justice showed that while acting as providers, Ghavami, Heinz and Welty conspired with other providers and with a broker to corrupt the bidding process for more than a dozen investment agreements in order to increase the number and profitability of the agreements awarded to UBS.  At other times, while acting as brokers, Ghavami, Heinz, Welty and their co-conspirators arranged for UBS to receive kickbacks in exchange for manipulating the bidding process and steering investment agreements to certain providers. Ghavami, Heinz and Welty deprived the municipalities of competitive interest rates for the investment of tax-exempt bond proceeds that were to be used by municipalities to refinance outstanding debt and for various public works projects, such as for building or repairing schools, hospitals and roads. Evidence at trial established that they cost municipalities around the country and the U.S. Treasury millions of dollars.

During the trial, the government presented specific evidence relating to 26 corrupted bids, including 76 recorded conversations made by the co-conspirator financial institutions. Among the issuers and not-for-profit entities whose agreements or contracts were subject to the defendants’ schemes were the commonwealth of Massachusetts, the New Mexico Educational Assistance Foundation, the Tobacco Settlement Financing Corporation of Rhode Island, the Hospital Authority of Forsyth County, Ga., and the RWJ Health Care Corp. at Hamilton in New Jersey.

“The charges against these individuals outline a deceptive scheme to subvert competition in the marketplace. Those who engage in this type of criminal activity not only stand to defraud public entities, but erode the public’s trust in the competitive bidding process,” said George Venizelos, Acting Director in Charge of the FBI in New York.  “The sentences announced today remind the public that the FBI will continue to work with the Antitrust Division to ensure the integrity of competitive bidding in public finance.”

“Those who manipulate the competitive bidding system to benefit themselves will be held accountable for their criminal activity,” said Richard Weber, Chief, Internal Revenue Service – Criminal Investigation (IRS-CI). “The defendants conspired with others to corrupt the bidding process for more than a dozen investment agreements in order to increase the profitability of the agreements awarded to UBS. Quite simply, they enriched themselves at the expense of the towns and cities that needed the money for important public works projects such as building and repairing schools, hospitals and roads. IRS-CI is committed to using our financial expertise to uncover this kind of corruption.”

Ghavami was found guilty on two counts of conspiracy to commit wire fraud and one count of substantive wire fraud. Heinz was found guilty on three counts of conspiracy to commit wire fraud and two counts of substantive wire fraud. Welty was found guilty on three counts of conspiracy to commit wire fraud.

A total of 20 individuals have been charged as a result of the department’s ongoing municipal bonds investigation, and 19 have been convicted or pleaded guilty. Another individual awaits trial. Additionally, one company, Rubin/Chambers, Dunhill Insurance Services Inc. has pleaded guilty.

The sentences announced today resulted from an ongoing investigation conducted by the Antitrust Division’s New York and Chicago Offices, the FBI and the IRS-CI. The division is coordinating its investigation with the U.S. Securities and Exchange Commission, the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York.

Today’s charges were brought in connection with the President’s Financial Fraud Enforcement Task Force. The task force was established to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. Attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed nearly 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,900 mortgage fraud defendants. For more information on the task force, please visit www.StopFraud.gov.

Home Health Agency Owner Pleads Guilty for Role in $13.8 Million Medicare Fraud Scheme

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Detroit-area resident Javed Rehman pleaded guilty today for his role in a $13.8 million Medicare fraud scheme, announced Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division; U.S. Attorney for the Eastern District of Michigan Barbara L. McQuade; Special Agent in Charge Robert D. Foley III of the FBI’s Detroit Field Office and Special Agent in Charge Lamont Pugh III of the Chicago Regional Office for the U.S. Department of Health and Human Service’s Office of Inspector General (HHS-OIG).

 

Rehman, 50, of Farmington Hills, Mich., pleaded guilty before U.S. District Judge Gerald E. Rosen in the Eastern District of Michigan to one count of conspiracy to commit health care fraud.  At sentencing, scheduled for Nov. 7, 2013, Rehman faces a maximum penalty of 10 years in prison.

According to information contained in plea documents, in or around May 2009, Rehman purchased Quantum Home Care Inc. with co-conspirators Tausif Rahman and Muhammad Ahmad.  Rehman paid kickbacks to recruiters to obtain Medicare beneficiary information used to bill Medicare for home health services – including physical therapy and skilled nursing services – that were never rendered.  Rehman was the administrator of Quantum and was responsible for the submission of false and fraudulent claims to Medicare based on falsified files created by the co-conspirators.

Medicare paid approximately $1.7 million to Quantum for physical therapy and skilled nursing services that Quantum purported to render between approximately June 2009 and September 2011.  According to court documents, between 2008 and 2009, Rehman’s co-conspirators acquired control of three other home health care companies. The four companies, including Quantum, received approximately $13.8 million from Medicare in the course of the conspiracy.

Rahman pleaded guilty on Jan. 5, 2012, to one count of conspiracy to commit health care fraud and one count of money laundering and is scheduled for sentencing on Oct. 30, 2013. Ahmad pleaded guilty on Aug. 28, 2012, to one count of conspiracy to commit health care fraud and is scheduled for sentencing on Oct. 29, 2013.

This case was investigated by the FBI, HHS-OIG, and IRS Criminal Investigation and was brought as part of the Medicare Fraud Strike Force, supervised by the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Eastern District of Michigan. It is being prosecuted by Assistant Chief Catherine K. Dick of the Criminal Division’s Fraud Section.

Since its inception in March 2007, the Medicare Fraud Strike Force, now operating in nine cities across the country, has charged more than 1,500 defendants who have collectively billed the Medicare program for more than $5 billion.  In addition, HHS’s Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, is taking steps to increase accountability and decrease the presence of fraudulent providers.