Don’t Screw with the IRS – Kenneth Frank Harycki pleads Guilty faces Prison

January 21, 2015

KENNETH FRANK HARYCKI, 51, plead guilty to conspiracy to defraud the United States by preparing and filing tax forms that he knew to be fraudulent. HARYCKI pleaded guiltyd to perpetrate,” said U.S. Attorney Luger. “By his guilty plea, Mr. Harycki kenneth Haryckihas taken responsibility for his actions, but that does not excuse his criminal acts. This defendant not only violated his accounting license by covering up a tax fraud, he eroded the trust of the residents of Stillwater, who elected him to a position of high public office.”

According to his guilty plea, during the course of the conspiracy, HARYCKI owned and operated businesses that provided bookkeeping, payroll, and accounting services, including tax- related services, to clients. In 2007, the defendant began providing services to two separately charged co-conspirators. Within the first few payroll cycles for Model Health Care (Model), a company controlled by the two separately charged co-conspirators, the defendant concluded that while payroll taxes were being withheld from the wages of employees, those taxes were not being paid over to the government. The defendant learned that these co-conspirators had directed that the withheld taxes not be paid to the government and, instead, the taxes would be used for other purposes, including compensating the co-conspirators and their family members and funding other businesses operated by the co-conspirators.

According to the defendant’s guilty plea, on February 18, 2010, HARYCKI created the entity MKH Holdings, Inc., to assume control over bank accounts used to fund businesses operated by the co-conspirators. The entity was used to cause funds falsely reported on income tax returns to be paid to the co-conspirators and others. During the course of the conspiracy, HARYCKI also incorporated other businesses, obtained employer identification numbers, paid for personal expenses, filed false tax returns, and opened and used numerous bank accounts for the benefit of the separately charged co-conspirators in order to avoid payment of taxes.

The tax loss from the defendant’s relevant conduct is between $1 million and $2.5 million.


Dan LaMarch Payroll Tax Fraud – Plea Agreement – Prison and Restitution in the Future!

October 16, 2008

Some one following this case, which I reported on back in February 2008, provided me with a copy of the plea agreement.  If you would like a complete copy e-mail me at chuck@chuckgallagher.com.

As a business ethics and fraud prevention speaker, I have had several folks ask just what the punishment would be for such a crime.  Below are reprints from the plea agreement.  Keep in mind, the judge is not bound by the agreement, so he/she would have the authority to make a decision other than what the US Attorney and LaMarch have agreed to.

The relevant provision are as follows:

The parties understand and agree that the offenses to which the defendant will enter a plea of guilty carry the following maximum term of imprisonment and fine: Count 6 (failing to pay over payroll taxes), five (5) years and $250,000; Count 17 (filing a false tax return), three (3) years and $250,000; and Information (wire fraud), twenty (20) years and $250,000. Each count also carries a mandatory special assessment of$100 and a maximum term of supervised release to follow any term of confinement of up to three years. The parties further recognize that a restitution order may be entered by the court.

A total of 28 years according to the agreement is possible, with the likely hood that LaMarch will serve the terms concurrently – meaning that he will likely get 20 years in federal prison plus restitution.

According to the Green Bay Press Gazette:

Daniel LaMarch, 55, who, along with his wife, Kay, owns Title Service of Green Bay, was initially indicted in U.S. District Court on 20 counts of failing to pay payroll taxes and filing false tax returns.

Federal prosecutors alleged that LaMarch withheld from his business’ employees’ wages more than $500,000 that he was supposed to pay the Internal Revenue Service from January 2002 to December 2005.

Initial charges could have had LaMarch facing up to 92 years in prison.  28 is less, but not insubstantial.  he faces sentencing on January 14, 2009.

Your comments are welcome!


GUILTY! Stephen Michael Ewing Has Day In Court Over Massive Payroll Tax Fraud Nursing Home Scheme

March 7, 2008

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.

hand-cuffs.jpg

In an update to a prior report, 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.  Today Stephen Michael Ewing was found GUILTY!
Well, Stephen Michael Ewing’s day in court has come and he’s facing what used to be partners who have now become bitter enemies. Gary R. Trebert, a Frisco attorney who was Ewing’s former business partner and turned states evidence as part of a plea deal he reached as he awaits sentencing. Obviously, he is hoping for a downward departure from the sentencing guidelines as he helps the government in its prosecution of Ewing, the only co-conspirator who elected to plead not guilty.

According to trial testimony and a report from the Star Telegram, Trebert’s role involved legal advice relating to the acquisition of nursing homes. Ewing oversaw operations and finances, according to Trebert. Larry May of Hurst, was reportedly a figurehead whose name would be used on nursing home and federal funding applications.

U.S. Attorney Richard Roper said, “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.”

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.

Dennis Olson of Dallas, Ewings attorney stated, “You can be present when a crime is being committed and not be guilty of the crime.” Representing his client Olson said Ewing was interested only in a legitimate business and that he alerted federal authorities about the scam.

According to the government’s indictment 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. Trebert’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. The trial results should be forthcoming. Then we will see if the “I just didn’t know” defense will hold up. More to come!


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

February 27, 2008

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!


Payroll Tax Evasion Earns Lucky Mata 10 Years in Federal Prison! Maybe He Wasn’t So Lucky!

February 25, 2008

Sorry about the play on words, but Lucky Mata, 47, of West Palm Beach, and owner of Kodiak Construction and Management, Inc., was sentenced on Friday, February 22, 2008 to serve a total of ten years in prison on multiple charges relating to his evasion of federal payroll taxes.

Ten years in prison is nothing to sneeze at. Having been there, as best I recall, if one earns this dubious distinction – especially with that number of years – it won’t be spent in a minimum security facility. So “Lucky” won’t find himself so lucky when he enters a medium security federal prison.

So what’s the background? According to the news release from the US Attorney’s office:

Kodiak underpaid its federal payroll taxes by nearly $3,000,000 between 1994 and 2005, during which time it paid its workers nearly $18,000,000 in cash payments without any employer withholding.

Evidence at the trial showed that Mata paid cash wages to most of his workers in order to avoid federal payroll tax obligations. Check cashers posing as subcontractors helped him to perpetrate the scheme. Mata caused the check cashers to lie to banks about the final destination of the cash after it left the bank, and then caused multiple false federal payroll tax returns to be filed with the Internal Revenue Service. The total scheme involved more than $18,000,000 in Kodiak wages over a ten-year period.

According to the evidence, Mata caused fraudulent invoices to be presented to the grand jury that was investigating this matter. Kodiak paid cash to most of its construction workers, without any federal withholding taxes being deducted from the wages. In addition, the evidence showed that many of the workers were undocumented aliens.

Every choice has a consequence! How often I say this in the blogs I write or the presentations I make. As a white collar crime and ethics speaker, I know full well the effect of choices that one can make. Having made bad choices in my past and spent time in federal prison as a result, I know that you do reap what you sow. Likewise, I understand that good choices can yield outstanding consequences.

Unlucky for Lucky – he will be spending almost 20% of his life in federal prison. Perhaps during that stay, he’ll get a chance to explore whether the short term gain was worth the long term consequences.

Your comments welcome!


Protected: You Can’t Fool The IRS – Palm Spring Man Convicted in Scheme to Defraud IRS! Choices and Consequences says Ethics Speaker Chuck Gallagher

February 23, 2008

This content is password protected. To view it please enter your password below: