James R. Cheek, Tax Evasion, AR 2024

TEXARKANA, AR – Two men connected to the now-defunct Hope Medical Park Hospital are trading freedom for federal prison cells after admitting to a brazen scheme to avoid paying payroll taxes. James R. Cheek, 68, of Waleska, Georgia, and Herschel J. Breig, Sr., 69, of Nixa, Missouri, each received a 36-month sentence this week, followed by three years of supervised release, after pleading guilty to one count each of Failure to Collect or Pay Over Tax.

The pair, who served as principals at Hope Medical Park Hospital, were tasked with collecting, accounting for, and remitting the hospital’s payroll taxes to the Internal Revenue Service between 2009 and 2012. Instead, they allegedly pocketed the funds, leaving a staggering $6,000,000 unpaid. Judge Susan O. Hickey delivered the sentences in the United States District Court in Texarkana, also ordering the two men to jointly and severally pay back the full amount in restitution.

The investigation, which began years ago, culminated in a federal grand jury indictment in July 2015. Both Cheek and Breig eventually entered guilty pleas in September 2016, but the case dragged on, delaying justice for the government and, potentially, the employees whose social security and Medicare benefits were jeopardized by the fraud. The delay is typical in these cases, as the amounts are large, and the paper trail extensive.

“Corporate executives have a responsibility to withhold federal income taxes for their employees and then remit those taxes to the IRS on their behalf,” stated Tracey D. Montaño, Special Agent in Charge. “Employment tax evasion not only results in the loss of tax revenue to the United States government, employees also lose future social security or Medicare benefits.” Montaño’s statement underscores the far-reaching consequences of such schemes, extending beyond simple financial loss.

The IRS Criminal Investigation Division and the Federal Bureau of Investigation worked together on the investigation, highlighting the collaborative effort required to tackle complex financial crimes. Assistant United States Attorneys Candace Taylor and Jonathan D. Ross successfully prosecuted the case, securing the convictions and ensuring the defendants face consequences for their actions. This case serves as a warning: attempting to cheat the system carries significant risk.

For those seeking further details, related court documents are available on the Public Access to Electronic Records website at www.pacer.gov. Grimy Times will continue to monitor this case and report on any further developments. This isn’t just about money; it’s about accountability and protecting the financial security of working Americans.

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