$34 Million Dollar Payroll Tax Fraud By Texas Nursing Home Executive!

U.S. Attorney Richard Roper said in a recently issued news release, “This case is the one of the largest payroll tax fraud cases ever prosecuted in the U.S. Mr. Trebert admitted evading more than $34 million in payroll taxes – this is nothing short of egregious. Nursing homes should be safe havens for the elderly and vulnerable, not vehicles for criminals to commit fraud.”

Gary R. Trebert, age 57, pled guilty to two counts of an indictment that charged him with various offenses related to his operation of nursing homes in Texas and elsewhere. Co-defendant Larry Gordon May pled guilty to his role in the conspiracy in October 2007 and co-defendant Stephen Michael Ewing, a/k/a “Stephen Michaels,” is scheduled to go on trial March 3, 2008.

Trebert admitted that beginning in August 1999 and continuing though mid-May 2004, he, Stephen Michael Ewing and Larry May conspired together, and with others, to defraud the U.S. by impeding, impairing, obstructing, and defeating the lawful government functions of the IRS in the ascertainment, computation, assessment, and collection of the revenue, that is, nursing facility employees’ withheld income taxes, social security taxes and medicare taxes, and HHS in the administration of the Social Security Act and the Medicare and Medicaid programs.

As part of the conspiracy, Trebert and his coconspirators, using the names of sham corporate entities, obtained control of 70 licensed nursing facilities with thousands of patient beds and thousands of employees. In order to acquire control of these facilities, Trebert, Ewing and May used false statements and false and fraudulent documents including Applications for Nursing Facility License and Medicaid Contracts, Medicare Federal Provider Enrollment applications, ownership documents, IRS Employer Identification Number applications, Health Insurance Benefit Agreements, and Electronic Fund Transfer forms. Their falsifications included falsely identifying relatives as owners, operators, and managers of the nursing homes on the applications; failing to disclose staffing/payroll companies on nursing home applications; failing to disclose Ewing and May as the true owner/operators of nursing homes; and forging names of individuals on filed documents to divert responsibility away from the three defendants. Trebert and his co-conspirators used the false statements and documents to hide from HHS, state licensing and Medicaid agencies, and the IRS, the true control and management of the nursing facilities, their responsibility for more than $200 million in money derived from the nursing homes, and their responsibility for the nursing facilities’ residents.

More than 150 sham staffing/payroll entities, many with foreign business addresses at drop boxes in England and Austria, were created to file Form 941 employer withholding tax returns with the IRS, preventing the IRS from assessing and attempting to collect more than $34 million of unpaid payroll tax liabilities from Trebert, Ewing and May, and creating the appearance that these sham staffing/payroll entities employed more than 4500 nursing facility employees, when they did not. From time to time Trebert caused his coconspirator to fly to London in order to mail to the IRS the sham payroll/staffing companies’ false withholding tax returns.

Trebert admitted that he and his coconspirators diverted to themselves and their personal activities substantial sums of money derived from their nursing home operations and from the non-payment of employees’ withheld payroll taxes. Trebert also admitted that in April 2004, he attempted to evade and defeat the assessment and payment of more than $4,113,000 in withholding taxes taken out of employees’ pay at 42 nursing homes he and his coconspirators controlled.

“Evading employment taxes can have serious consequences for employers and their employees. Today’s guilty plea demonstrates that those who willfully attempt to undermine our tax system by playing fast and loose with the rules will be held accountable, regardless of how complicated a scheme they devise,” said Erick Martinez, IRS Special Agent in Charge for the Dallas Field Office.

In the plea agreement, Trebert will spend 8 years in federal prison. Needless to say, when sentenced, Trebert will also be facing substantial restitution – which he may not be able to repay.

Every choice has a consequence! Regardless of how well thought out, no one will escape the consequences of their choices. As a business ethics and white collar crime speaker, I know from personal experience that you reap what you sow. While Trebert and others got by with their scheme for 5 years, the reality is the consequences of their actions will be far greater than any benefit they received.

Your comments are welcome – as you might have been a victim of this massive scam. But let me leave you with this – before you make a choice consider what is the worst thing that could happen – feel what that would feel like – then make your choice. Trust me, the consequences to negative choices are far worse than any gain you can imagine!

Jailhouse Lawyer Being Investigated – Guess He Ticked Off the South Carolina Attorney General

Just when you think you’ve made history – some “better than thou” Attorney General steps up to put you back down again. Any surprise that this is coming from South Carolina. Somehow I don’t see that as a tolerant state – at least not for Michael Ray!

Michael Ray – not a household name – is a federal inmate in the State of South Carolina. What is significant about Mr. Ray – he helped fellow inmate Lavon Burgess appeal his conviction for possession of crack cocaine with the intent to distribute. O.K., so Ray is a “jailhouse lawyer” – not a lawyer by license, but a lay person who has a knack for the law.

Oh, but there’s more! The U.S. Supreme Court is scheduled to hear on March 24, the appeal where Burgess is arguing that a prior drug conviction prosecutors used to get him the 20-year minimum prison sentence shouldn’t have applied because it was a misdemeanor instead of a felony. Conflicting court rulings have required 10-year sentences for people already convicted of misdemeanors, so a successful appeal could trim Burgess’ sentence in half.

Stop! So let this sink in – a 29 cent an hour felon who is a member of the American Bar Association and a certified paralegal, helped another inmate file an appeal that is being heard by the United States Supreme Court! Is that cool or what?

Stanford University law professor Jeff Fisher will argue Burgess’ case before the U.S. Supreme Court. Legal experts estimate the high court agrees to hear less than 1 percent of the thousands of cases it receives each year.

Now, according to Rauch Wise, a South Carolina lawyer who represents Ray, the authorities are looking into whether Ray is guilty of unauthorized practice, a crime that carries up to two years in prison and a $5,000 fine. South Carolina’s Attorney General Henry McMaster is investigating Ray for practicing law without a license.

Sorry, but McMaster is just wrong – both legally and ethically!

Federal Bureau of Prison regulations state, “an inmate may assist another inmate … with legal research and the preparation of legal documents for submission to a court or other judicial body.” And in his letters, Ray cited a U.S. Supreme Court case he said illustrated rights bestowed upon prison law clerks.

In Johnson v. Avery, the court in 1969 sided with a Tennessee prisoner who argued he had been improperly disciplined for helping another inmate prepare legal documents, ruling that prison officials could not deprive prisoners of such assistance.

A September Ohio Supreme Court decision could foreshadow Ray’s fate, said Michael Frisch, ethics counsel and adjunct professor at Georgetown University Law Center. The justices narrowly upheld an inmate’s right to draft legal documents for other prisoners because there was no “reasonable alternative” to their services.

As an ethics speaker, I am not proud of my past – I did spend time in federal prison – and if it were not for prison “jailhouse” lawyers, many would have no chance at any reasonable legal representation. Not that all jailhouse lawyers are good, but how, otherwise, would an inmate gain protection of their rights?

Oh…stop. I can hear some saying…what rights? Inmates are inmates and have no rights! Right? Wrong!

What if Burgess is overturned…then with Ray’s help many will find that they will have reduced sentences based on the opinion of the highest court in the land.

My suggestion…leave Ray alone and give him the benefit of seeing where this Supreme Court ruling lands.

Your Comments?

Pedophile (?) Suicide = NBC Emotional Distress Suit! Is This Twisted Justice?

Chris Hansen, investigative reporter from the series “To Catch a Predator” was accompanied by a camera crew and SWAT team on the afternoon of November 5, to the house of a Texas prosecutor, (yes…I said prosecutor), Louis William Conradt, Jr.

The program, aired on NBC, worked with local police departments along with an online watchdog group – Perverted Justice – to lure suspected pedophiles to so-called sting houses – using as bait “decoys” – adults posing as teenage boys.

According to published articles – this one quoted from law.com: Conradt had served for five terms as a district attorney in Kaufman County, Texas, and was an assistant prosecutor in Rockwell County, Texas, when he allegedly contacted a decoy who had been posing online as a 13-year-old boy.

Using this information, police obtained search and arrest warrants for Conradt. Police and “Dateline” cast and crew, including NBC News correspondent Chris Hansen, went to his home in the town of Terrell, Texas, on the afternoon of Nov. 5.

Members of the SWAT team went into the house through a back door and saw Conradt step into a room and say, “I’m not going to hurt anyone.” He then shot himself with a handgun.

A police officer then reported the shooting on camera to Hansen and allegedly said to a “Dateline” producer, “That’ll make good TV.”

So when is it good TV vs. a violation of what is moral and ethical? That is a question apparently to be settled by the courts. Now, Condradt’s sister is suing NBC in the Southern District of New York for $100 million, claiming, among other things, intentional infliction of emotional distress. In rejecting NBC’s 12(b)(6) motion to dismiss, Judge Denny Chin wrote that if the allegations are proved true, a jury could find that “NBC crossed the line from responsible journalism to irresponsible and reckless intrusion into law enforcement.”

According to Bruce Baron, lawyer representing the Conradt family, this “sends a strong message to law enforcement throughout this country: Never subcontract your uniform, badge and the oath you take.”

A spokeswoman for NBC, however, said “the evidence will ultimately show that ‘Dateline’ acted responsibly and lawfully.”

“We will continue to defend ourselves vigorously,” said the spokeswoman, Jennifer Tartikoff. “The judge’s ruling was based solely on the plaintiff’s version of the facts. For purposes of this motion only, the judge was required, under the law, to accept the plaintiff’s allegations as true.”

Again, according to law.com: In its motion to dismiss the complaint for failure to state a claim upon which relief may be granted, NBC argued that it owed no duty to protect Conradt from killing himself and that its alleged conduct was not “extreme and dangerous” so as to meet the standard under Texas law for intentional infliction of emotional distress.

Judge Chin said he was dismissing many of Conradt’s claims, but the principal claims survived.

“Rather than merely report on law enforcement’s efforts to combat crime, NBC purportedly instigated and then placed itself squarely in the middle of a police operation, pushing police to engage in tactics that were unnecessary and unwise, solely to generate more dramatic footage for a television show,” Chin said.

As an example, the judge said a jury could find “that there was no legitimate law enforcement need for a heavily armed SWAT team to extract a 56-year-old prosecutor from his home when he was not accused of actual violence and was not believed to have a gun, that this was done solely ‘to sensationalize and enhance the entertainment value’ of the arrest.”

In declining to dismiss the emotional distress claim, the judge held that NBC “created a substantial risk of suicide or other harm, and that it engaged in conduct so outrageous and extreme that no civilized society should tolerate it.”

Ethical Choices? As an ethics speaker, this whole issues raises interesting questions. First, assuming Conradt was a pedophile – does his right to minimize a substantial risk of suicide need to be protected? Again, assuming guilt on Conradt’s part, what protections should have been in place to protect the abused children? Should NBC be allowed to sensationalize the process and arrest – ignoring the possible outcomes (including suicide)? If NBC is found guilty, should the proceeds from any award go to compensate the children and families that Conradt abused or harmed?

Comments are welcome!