Everything Is Not Coming Up Roses

14383774 - tax papers in an envelope with dollar bills and handcuffs

The floral business is fairly easy to get into, but it is very competitive. Survival can be tough. An Upper Southampton, Pennsylvania couple, who ran an online flower business out of Orlando, Florida, made a very expensive mistake by neglecting to pay their taxes and their unemployment insurance premiums. They committed tax fraud by robbing the Internal Revenue Service (IRS) of tax revenue and their employees of future Social Security and Medicare benefits.

The couple’s floral business was incorporated in Pennsylvania, but they operated it out of Florida. The business received floral arrangement orders from across the country over the internet and through a telephone call center. (Fees to participate in this type of service can be steep, which can make it difficult to make a profit.) The business owners avoided paying employee taxes by identifying them as contractors. They also failed to collect and pay unemployment insurance for their employees over 13 years.

According to evidence at their joint trial, the man and woman filed fraudulent corporate and personal income tax returns with Uncle Sam. They purportedly diverted business funds, which were falsely deducted as business expenses on the company’s tax returns, but did not report the amount as income on their personal returns. The husband and wife fraudulently deducted more than $200,000 in personal expenses as business expenses. (They used the money to buy luxury cars, make a down payment on a multi-million-dollar home, buy tickets to sporting events and pay for home repairs.)

In addition to the tax fraud, the two filed fraudulent employment tax returns for their company that falsely classified their employees as independent contractors. Based on that assumption, the man and woman claimed they did not owe employment taxes on the wages paid to those employees.

The couple was convicted of tax fraud at a joint trial. The 45-year-old husband was found guilty of six counts of aiding and assisting in the preparation of false income tax returns and was sentenced to three-and-a-half years in prison. His 45-year-old wife was convicted on six counts of filing false income tax returns and ordered to serve six months. (Not exactly the special delivery they were looking for.)

So much for the sweet smell of success in the online internet floral industry. While they may have built up a successful business that lasted for more than a decade, they were lacking business ethics. Where they are headed, you could say that everything is not coming up roses.

 Today’s “Fraud of the Day” is based on an article entitled, Upper Southampton couple jailed for floral business tax fraud,” published by The Intelligencer on August 22, 2018.

A husband and wife from Upper Southampton will serve federal prison time for tax fraud related to their internet floral business.

Andrew Bassaner, 45, was sentenced Tuesday in federal court in Philadelphia to three and a half years in prison for his role in the fraud, while his wife, Vicki Bunchuk, also 45, was ordered to serve six months, according to the U.S. Department of Justice.

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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.