Duping with Dad

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When a group of people set their minds on defrauding the government, and try really hard to do so, they’ll find a way. But they won’t as easily find a way out of prison. Recently, the U.S. Attorney General’s office exemplified this in a press release about a group of Massachusetts men, who used a payroll company to avoid paying $5.48 million they owed in taxes.

Here’s how it worked: The father and son, who owned the company, opened and hid from the corporate accountant two company bank accounts that they then used to conceal millions of dollars in taxable income. $11 million, to be exact, for which they should have paid about $4 million in related taxes.

Instead they purposefully failed to claim it as taxable income. (”Oh, THIS $11 million rainy day fund? I didn’t realize that’s what the government meant by ”taxable income.”)Source: Today’s ”Fraud of the Day” is based on, ”Owners of Worcester Payroll Company Sentenced for Tax Evasion and Fraud,” a press release published by the U.S. Attorney General’s office on May 11, 2016.

The co-owners and former owner of a payroll company in Worcester were sentenced today in U.S. District Court in Worcester for defrauding the IRS and tax evasion. One of the co-owners was also sentenced for embezzling client and employee funds.

William McCullough, 73, of Westborough, Mass., was sentenced by U.S. District Court Judge Timothy S. Hillman to one year and one day in prison, three years of supervised release and restitution of $1,825,933. In September 2015, he pleaded guilty to two counts of conspiracy to defraud the IRS, four counts of making false statements in tax returns, four counts of tax evasion, and one count of wire fraud. Robert McCullough, 43, also of Westborough, the son of William McCullough, was sentenced by Judge Hillman to eight months in prison and three years of supervised release. He previously pleaded guilty to two counts of conspiracy to defraud the IRS and four counts of tax evasion. Gary Davis, 74, of Jupiter, Fla., was sentenced to six months in prison and three years of supervised release. He pleaded guilty to one count of conspiracy to defraud the IRS, and three counts of tax evasion.

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Larry Benson
Larry Benson is currently the Director of Strategic Alliances for Revenue Discovery and Recovery at LexisNexis Risk Solutions. In this role, Benson is responsible for developing partnerships for the tax and revenue and child support enforcement verticals. He focuses on embedded companies that have a need for third-party analytics to enhance their current offerings.