Tax fraud promoter sentenced for conspiracy to obstruct and impede the IRS

How Does Criminal Employment Tax Fraud Happen?
March 27, 2014
Los Angeles based tax professionals arrested for tax evasion scheme
March 27, 2014

Tax fraud promoter sentenced for conspiracy to obstruct and impede the IRS

Date: 10/02/12

Topic: Tax Preparer Fraud

A federal judge in Massachusetts sentenced Catherine June Floyd to 5 years in prison and ordered her to pay restitution in the amount of $3 million for conspiring to defraud the United States and for obstructing the IRS. Floyd and two others were convicted for the promotion and use of multiple tax fraud schemes that totaled $2.5 million in unreported wages and concealed nearly $28 million in income.

Evidence presented at trial revealed Floyd’s involvement in an “under the table” payroll scheme that permitted employers to pay employees under the table without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law. The payroll scheme went under three different names: Contract America, Talent Management, and New Way Enterprises. Around 150 employers participated in the scheme that racked up $2.5 million in unreported income.

In addition, Floyd also marketed a scheme to hide income and assets from the IRS, which was dubbed an “underground warehouse banking” scheme. A Department of Justice release recapped the plan by stating, “the defendants maintained accounts at several banks and used the accounts to deposit and commingle business receipts and other funds received from subscribers in order to mask the true ownership of the funds.” As mentioned above, more than $28 million in deposits were shuttled through the different accounts.

Floyd and her conspirators were indicted along with four other back in 2009. The other four pled guilty to various counts of conspiracy and tax evasion. At present, all four defendants are awaiting sentencing.

The Tax Division of the Department of Justice is responsible for handling or supervising most federal criminal tax prosecutions. The Criminal Enforcement Sections are staffed with prosecutors who are particularly skilled at investigating, prosecuting and evaluating complex financial crime cases. Moreover, prosecutors conduct criminal tax investigations with the assistance of the IRS Criminal investigation Unit and the Treasury Inspector General for tax administration. Therefore, it is vital to have an experienced tax specialist on your side with a wealth of knowledge to draw from.