A temp agency is a recruiting firm that acts as an intermediary between candidates looking for work and customers needing short-term employees for their businesses. The employee, while a temporary employee to the customer, is a permanent employee to the temp agency. And the temp agency is responsible for the wellbeing of the worker. It must not only pay the wages to the employees, but the agency must also collect and pay all employee payroll taxes and maintain workers’ compensation insurance to protect employees who suffer work-related injuries. Dam Ngoc Luong owned and operated Four Seasons Temp, an agency providing temporary workers for client businesses. But Luong did not once consider the wellbeing of his employees. He only considered his own wellbeing.
From 2015 through 2019, when collecting payments from business clients of her temporary employment agency, Luong chose to cash most checks for her own personal use instead of depositing the funds into the business accounts. When it came time for her annual corporate tax returns to the IRS, Luong reported only the amounts deposited to the business account which amounted to far less than the amounts she deposited into her personal accounts. In doing so, Luong failed to pay millions in taxes due to unclaimed business income and personal income taxes. But that wasn’t her only fraud!
Luong paid more than $12 million of employee wages in cash “under the table.” Which meant she failed to withhold taxes from the cash wages. In doing so she failed to pay to the IRS more than $3 million in employment taxes. By concealing the cash wages paid to her employees, Luong paid lower workers’ compensation insurance premiums and defrauded the insurance carrier of $155,000 in premiums she should have paid, putting her employees at risk of not being eligible for benefits they should legally have. Fraudsters will place money over human life every single time.
Great job by the Department of Labor in this investigation.
Today’s Fraud of The Day is based on article “Massachusetts Staffing Firm Owner Gets A Year In Prison, Must Pay Nearly $4.0 Million” published by SIA Staffing Industry Analysts on September 18, 2023
A Massachusetts staffing firm owner was sentenced to a year in prison and ordered to pay nearly $4.0 million in restitution to the IRS and $155,870 in restitution to Traveler’s Insurance Co., the US Department of Justice announced on Sept. 15.
The owner, Dam Ngoc Luong, 70, of Dorchester, Massachusetts, had previously pleaded guilty to two counts of filing false corporate and individual tax returns, three counts of failure to collect and pay over employee taxes and one count of mail fraud, the department said.