Charles J. Rutherford, Tax Evasion, Tennessee 2016

GREENEVILLE, Tenn. – A former high-ranking official at a local paint company has been sentenced to 18 months in federal prison for evading taxes on over $200,000 in embezzled funds.

On May 2, 2016, Charles J. Rutherford, 44, of Johnson City, Tenn., was sentenced for filing false and fraudulent federal tax returns in an attempt to evade and defeat paying income tax. Rutherford was convicted of this crime in January 2016.

Between 2006 and 2014, while serving as vice president of Woods Paint Company (“WPC”) in Bristol, Tenn., Rutherford embezzled approximately $1 million by paying his own personal expenses out of company accounts.

Although the funds were stolen, he was obligated to report the embezzled money as income on his federal individual income tax returns, which he failed to do for tax years 2008 through 2013. By filing false and fraudulent returns, he evaded paying well over $200,000 in federal taxes.

In addition to his prison sentence, he was also ordered to pay over $1.2 million in restitution, to both WPC and the Internal Revenue Service (IRS). Rutherford will also be prosecuted in state court for theft.

This investigation was conducted jointly by the Sullivan County Office of the District Attorney General, City of Bristol Tennessee Police Department, and IRS-Criminal Investigation Division. Assistant U.S. Attorney David Gunn represented the United States.

According to the IRS, the prosecution of individuals who intentionally conceal income and evade taxes is a vital element of their enforcement strategy. Rutherford’s case serves as a reminder that all income is taxable, and those who evade taxes will be held accountable.

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