James R. Cheek, Failure to Collect or Pay Over Tax, Arkansas 2016

Taxpayers in Arkansas were betrayed by two executives who avoided paying $6 million in payroll taxes while working at Hope Medical Park Hospital. James R. Cheek, 68, of Waleska, Georgia, and Herschel J. Breig, Sr., 69, of Nixa, Missouri, were sentenced to 36 months in federal prison followed by three years of supervised release.

According to court records, both Cheek and Breig, as principals of Hope Medical Park Hospital, were responsible to collect, truthfully account for, and pay over the hospital’s payroll taxes to the Internal Revenue Service during the calendar years 2009, 2010, 2011, and 2012. However, they failed to pay approximately $6,000,000 in payroll taxes as was required.

“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.”

Both men were indicted by a federal grand jury in July, 2015 and both pleaded guilty in September, 2016.

The case was investigated by the Internal Revenue Service – Criminal Investigation Division and the Federal Bureau of Investigation. Assistant United States Attorneys Candace Taylor and Jonathan D. Ross prosecuted the case for the United States.

Herschel J. Breig, Sr., and James R. Cheek will have to pay $6,000,000 in restitution jointly and severally, a staggering sum that could have gone towards funding vital public services.

Restitution of $6,000,000 is ordered jointly and severally between the two defendants. Judge Susan O. Hickey presided over the sentencing hearings in the United States District court in Texarkana.

Related court documents may be found on the Public Access to Electronic Records website @ www.pacer.gov.

This is a grim reminder of the devastating consequences of tax evasion, and we at Grimy Times will continue to expose those who seek to cheat the system.

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