Accounting
Tax Fraud Blotter: Job woes
Heavy metal; with a side of alimony; Landing in jail; and other highlights of recent tax cases.
Quincy, Massachusetts: Business owner Su Nguyen, 60, has been sentenced to 18 months in prison to be followed by a year of supervised release for filing false corporate tax returns to hide corporate revenue and to evade more than $2 million in taxes.
Between 2016 and 2020, Nguyen owned and operated General Employment Services, a temporary employment agency. Clients paid General by check for the work by employees. Nguyen deposited a small number of client checks in a bank account that he used for business and reported that income to the IRS. Nguyen cashed most of the checks at a local check casher and used that cash on himself and to pay employees’ wages off the books.
In total, Nguyen cashed more than $10 million in client checks and did not report to the IRS that revenue or the cash wages.
Nguyen, who pleaded guilty in May, was also ordered to pay $2,090,192.77 in restitution.
Jacksonville, Florida: Pablo Isila Euceda-Hernandez, a Honduran national in the United States illegally, has been sentenced to 27 months in prison for conspiracy to commit wire fraud and conspiracy to commit tax fraud.
Euceda-Hernandez established a shell company that purported to be involved in the construction industry, obtaining a workers’ compensation insurance policy in the name of the company to cover a minimal payroll for a few purported employees. He then rented the workers’ compensation insurance to work crews who had obtained subcontracts on projects in Florida as well as contractors in other states.
He sent contractors a certificate as “proof” that the work crews had workers’ compensation insurance. The scheme also facilitated the avoidance of the higher cost of obtaining adequate workers’ compensation insurance for the workers on the crews to whom Euceda-Hernandez rented the workers’ comp insurance.
As part of the scheme, the contractors issued payroll checks for the workers’ wages to the shell companies and Euceda-Hernandez cashed these checks, then distributed the cash to the work crews after deducting their fee, which was typically about 6% of the payroll. He cashed payroll checks totaling some $5 million. Neither the shell company nor the contractors reported to government authorities the wages that were paid to the workers, nor did they pay either the employees’ or the employer’s portion of payroll taxes.
According to the IRS, the amount of payroll taxes due on wages collected by Euceda-Hernandez totaled $1,214,508.
The court also ordered Euceda-Hernandez to pay $1,214,508 in restitution to the IRS and the court entered a money judgment against him for $336,029, the proceeds of the wire fraud.
Rutland, Vermont: Business owner James Mailhiot Jr. has pleaded guilty to federal income tax evasion.
Mailhiot owned and operated a roofing business that generated some $1.6 million in gross revenues between 2019 and 2022. He used an out-of-state accountant to prepare his federal returns and sent the accountant records of revenues and expenses from roofing jobs that year.
The records Mailhiot gave to the accountant were incomplete, resulting in a substantial understatement of his annual taxable income and substantial underpayments of the taxes he owed to the IRS.
Mailhiot’s underpayments for 2019 to 2022 totaled $296,000.
Sentencing is March 27. He faces up to five years in prison and a fine of up to $100,000.
Santa Clara, California: Exec John Comeau has pleaded guilty to not paying federal employment taxes.
Comeau was CEO of Vivid Inc., which provided metal coating services across various industries. From at least the first quarter of 2010 through the end of 2019, Vivid withheld Social Security, Medicare and income taxes from the wages paid to its employees but did not report or pay the money to the IRS.
In total, he caused a tax loss of some $1,150,000.
Sentencing is April 30. He faces a maximum of five years in prison, as well as a period of supervised release, restitution and monetary penalties.
Dorchester, Massachusetts: Business owner Det Tran, 62, has been sentenced to a year and a day in prison, to be followed by three years of supervised release, for a multiyear tax fraud in which he failed to pay employment taxes for his temporary employment agency.
He owned and operated HTP Temp. Inc., which provided temporary workers for client businesses. Tran paid $8 million in off-the-books cash wages to HTP employees, and, through his concealment of these cash wages, caused his accountant to prepare false federal quarterly filings for employee wages and tax withholdings between 2018 and 2021. Tran evaded more than $2.1 million in employment taxes owed to the IRS.
Tran, who pleaded guilty in September, was also ordered to pay more than $2.5 million in restitution.
Sacramento, California: Richard Jason Mountford, formerly of Monterey County, California, and now of Las Vegas, has been sentenced to 27 months in prison for conspiring to file false claims against the United States.
From 2016 to 2020, Mountford conspired with another person to submit false individual income tax returns seeking undeserved refunds. Mountford and his co-conspirator filed false income tax returns in their own names, as well as in the names of two other unwitting individuals, that falsely reported they’d received wages — from a bogus employer — from which taxes had been withheld. Most of the returns also falsely reported alimony payments to inflate the refunds.
Mountford and his co-conspirator received $873,723.53 from the IRS. Mountford deposited $757,075.53 of those funds into his own bank accounts and subsequently purchased nearly $360,000 worth of new cars. Mountford also distributed about $170,000 in cash and gold bars to his co-conspirator.
In addition to his prison sentence, Judge Nunley ordered Mountford to serve a year of supervised release and to pay $757,075.53 in restitution to the U.S.
Panacea, Florida: Real estate agent Sedita Charles Cayson, 59, has been found guilty of willfully failing to file his income tax returns for five years.
Cayson, known as the “Land Man,” was a serial non-filer with a history of delinquencies with the IRS; he was assessed liens for 2004 to 2007 and 2011 to 2013. Despite earning real estate sales commissions averaging more than $150,000 per year, he also failed to file income tax returns for 2017 to 2021.
Beginning in 2017, Cayson instructed his real estate broker to split his commission checks into amounts that were less than $10,000, most of which Cayson cashed at a bank immediately.
Sentencing is Feb. 24. He faces up to a year in federal prison and a $25,000 fine for each count, followed by up to a year of supervised release.
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