Executive Decision

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There are times when an executive decision must be made. (The head honcho is often required to make tough decisions to ensure an organization survives and meets its mission.) A press release published by the Department of Justice tells the story of a corporate executive who made a few poor decisions that ultimately scammed the Internal Revenue Service (IRS) and probably upset quite a few company employees as well. (He certainly wasn’t thinking about helping his organization to be profitable or to survive.)

The press release states that the former executive chairman of a holding corporation that owned a technology firm oversaw the collection, accounting and payment of payroll taxes at that particular company. While the man withheld the appropriate amounts from employee wages, he failed to pay the employee withholding amount and the employer matching portion to the IRS. (The press release states that the tax loss was more than $2.2 million.)

The fraudster’s illegal actions didn’t stop there. He also served as the person responsible for collecting and sending employee contributions on a bi-weekly basis to the company’s pension plan asset custodian. (A little here, a little there…no one will notice the missing contributions.) As you might guess, he did not forward those retirement contributions. The criminal’s poor conduct resulted in a loss of $186,263.

And, then there’s the issue of how he spent the employment taxes and pension contributions. (It appears that he likes to entertain.) The former executive spent more than $505,000 for the use of an executive suite at a Washington, D.C. football stadium. And, let’s not forget to mention that he sponsored a Virginia horse race for $40,000. (Most fraudsters like to live large or at least have the appearance of doing so.)

This poor executive decision-maker pleaded guilty to one count of willful failure to collect and pay employment taxes and one count of theft or embezzlement from an employee benefit plan. He faces up to five years in prison and a fine of $250,000 for the employment tax charge. The fraudster also could receive a five-year sentence and another fine of up to $250,000 for theft from an employee benefit plan.

As a result of his selfish acts, there are some pretty angry employees wondering where their retirement fund contributions went. (The least he could have done is to invite his victims to the football game or horse race.) Despite his poor executive decisions, the Judge will have the last say on the matter. Let’s hope the justice system makes the right decision and gives this criminal an appropriate punishment.

Source: Today’s ”Fraud of the Day” is based on a press release titled, ”Virginia Businessman Pleads Guilty to Employment Tax Fraud and Theft from Employee Benefit Plan,” released by the Department of Justice on June 10, 2014.

William P. Danielczyk Jr., formerly of Oakton, Virginia, pleaded guilty to one count of willful failure to collect and pay over employment taxes for the quarter ending Sept. 30, 2010, and one count of theft or embezzlement from an employee benefit plan for the calendar year 2010, the Department of Justice and Internal Revenue Service (IRS) announced today.

According to court documents, from March 2009 until December 2011, Danielczyk was the executive chairman of Innolog Holdings Corporation, a company that acquired Innovative Logistics Technology Inc. in March 2009. Innovative operated in the government services industry and provided technology-supported logistics services to the U.S. military and various defense organizations. The principal offices for Innovative and Innolog were located in McLean, Virginia, and later in Fairfax, Virginia.

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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.