Ziggies Bad Zag

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The idiom regarding ”zigging when one should have zagged” refers to doing one thing, when something else should have been done. (It usually means that bad choices lead to unfortunate results.) An entrepreneur who owned a restaurant chain named ”Ziggies” got into trouble when he neglected to pay more than $1.3 million in payroll taxes to the Internal Revenue Service (IRS). (The unfortunate result of his bad choice is a stint in prison for tax evasion.)

The former restaurant owner operated a chain of 11 businesses – nine in Missouri and two in Kansas for 16 years. During that time, he opened and closed 18 companies under the ”Ziggies” name.

The businessman withheld all of the appropriate taxes as directed by law including federal income tax, Social Security and Medicare from his employees’ wages. However, he did not pay the IRS as required. (He paid himself instead and enjoyed a lavish lifestyle that included lots of luxury vehicles, vacations, gambling trips and entertainment. Sounds like a lot of fun was had at the expense of the government.)

He was able to avoid the IRS by forming new businesses when he racked up a huge amount of overdue taxes. The man would cease operation under the old name and then open a new entity under the name of a family member, partner or employee, although the restaurant owner continued to maintain control of the new business. (He avoided a lot of taxes by doing this over and over again.)

The 43-year-old businessman pleaded guilty to failing to submit payroll taxes to the IRS, despite deducting $741,099 from his employees’ paychecks. (Apparently, he also declared bankruptcy to avoid paying $654,260 in past due federal and state employment taxes.) As a result, he received a sentence of three years and one month in prison without the possibility of parole. He is also required to pay $1,330,708 in restitution to the IRS.

Despite knowing that the IRS frowns upon those who disobey the agency’s rules and regulations, the former restaurant owner chose to zig when he should have zagged. (This fraudster will no longer be able to eat in any of his restaurants in the near future. It looks like he’ll be dining in a different chow line now – in prison where the menu is much more limited.)

Source: Today’s ”Fraud of the Day” is based on an article entitled, ”Former restaurant owner sentenced for $1.3 million tax scheme,” posted on ky3.com on August 18, 2016.

A federal judge has sentenced Agim Zendeli, 43, to three years and one month in federal prison without parole. The court also ordered Zendeli to pay $1,330,708 in restitution to the IRS.

Zendeli pleaded guilty to failing to pay over to the IRS the payroll taxes he collected from his employees.

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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.