A Little Off the Top

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Payroll processing can be overwhelming for businesses that don’t have the staff or the accounting knowledge needed to complete the task. Fortunately, there are companies that can help eliminate the challenges of payroll processing. An article published in the Kansas City Business Journal tells about the owner of a payroll services company who took a little off the top for himself instead of paying the appropriate employment taxes to the Internal Revenue Service (IRS) on behalf of a trusting client.

The story states that the owner was responsible for transferring more than $2 million of employment tax withholdings from his customer’s bank account to his own company’s bank account. He paid the IRS approximately $1.3 million and kept approximately $700,000 for himself. (I’d say that’s more than just a little off the top.)

The payroll services company owner was sneaky and was able to prevent IRS notices alerting the customer of unpaid taxes from being delivered. (He gave the agency a post office address that he controlled.)

The fraudster pleaded guilty to one count of filing a false tax return and one count of wire fraud for his criminal acts. He was sentenced to six-and-a-half years in prison.

Even though a third-party may make a mistake when processing the payroll, the customer is still responsible for the taxes. (Fortunately, the IRS works with victims to set up payment plans or reduce penalties, if possible.) While the customer is likely to recover from the fraudulent mistake, the criminal who took a little off the top went from living large to living at the bottom – in the penal system. The only thing this fraudster will be counting while serving time is the number of days until he gets out.

Source: Today’s ”Fraud of the Day” is based on an article titled, ”Payroll Company Owner Gets More Than 6 Years for Fraud Scheme,” written by Brian Kaberline and published in the Kansas City Business Journal on January 28, 2015.

A Johnson County man was sentenced to prison for skimming off employment tax money from a Lenexa company.

John M. Moore pleaded guilty to one count of filing a false tax return and one count of wire fraud. He was sentenced on Tuesday to 78 months in federal prison.

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Larry Benson, Senior Director of Strategic Alliances, LexisNexis Risk Solutions - Government

Larry Benson is responsible for developing strategic partnerships and solutions for the government vertical. His expertise focuses on how government programs are defrauded by criminal groups, and the approaches necessary to prevent them from succeeding.

Mr. Benson has 30 years of experience in sales and business development. Before joining LexisNexis® Risk Solutions, he spent 12 years founding and managing two software technology startups. During the 1990s he spent 10 years as a Regional Director helping to grow a New England-based technology company from 300 employees to 7,000. He started his career with Martin Marietta Aerospace working on laser guided weapons and day/night vision systems.

A sought-after speaker and accomplished writer, Mr. Benson is the principal author of “Fraud of the Day,” a website dedicated to educating government officials about how criminals are defrauding government programs. He has co-authored WTF? Where’s the Fraud? How to Unmask and Stop Identity Fraud’s Drain on Our Government, and Data Personified, How Fraud is Changing the Meaning of Identity.

Benson holds a Bachelor of Science in Physics from Albright College, and earned two graduate degrees – a Master of Business Administration from Florida Institute of Technology, and a Master of Science in Engineering from Lehigh University.