CAMDEN, N.J. – John Degan, 69, of Philadelphia, Pennsylvania, pleaded guilty before U.S. District Judge Robert B. Kugler in Camden federal court to an information charging him with one count of failing to collect, account for, and pay over payroll taxes, one count of failure to file income tax returns with the IRS, and one count of bank fraud.
According to documents filed in this case and statements made in court, Degan was the owner and operator of Companion Services Group Inc., a building maintenance and restoration service company in Gloucester City. Companion provided architectural maintenance and restoration services, which includes restroom maintenance, glass restoration, and graffiti removal.
Degan admitted that for tax years 2016 through 2020, he willfully failed to file payroll tax returns and failed to pay over $600,629 in withheld employment taxes on behalf of his employees. Degan attempted to conceal from the IRS over $4.4 million in wages that he paid to himself and his employees by not filing and submitting Forms W-2 or Form W-3 to the Social Security Administration (SSA).
Furthermore, Degan admitted that he received a yearly salary that ranged from $140,000 to $170,000 from Companion, willfully failed to file his federal income tax returns for tax years 2016 through 2020, and has not filed a tax return since 2003. He also failed to file the corporate tax returns for Companion, a business that generated more than $1.4 million in gross receipts yearly.
In addition, Degan submitted a fraudulent application to a lender to obtain a Paycheck Protection Program (PPP) loan. The Coronavirus Aid, Relief, and Economic Security (CARES) Act is a federal law enacted in March 2020 and was designed to provide emergency financial assistance from the economic effects caused by the COVID-19 pandemic.
Degan submitted a PPP application for Companion in which he falsely represented to the lender that Companion had employees and payroll expenses. In further support of his application, Degan submitted various IRS Forms to establish that he was paying compensation to his employees. Those forms were never actually submitted to the IRS; instead, they were false forms that were only created and used for the purpose of securing the loan.
Based on Degan’s misrepresentations, the lender approved the PPP loan and disbursed $193,407 in federal COVID-19 emergency relief funds. The charge of failing to collect, account for and pay over payroll taxes carries a maximum penalty of five years in prison and a fine of $250,000, or twice the gross gain or loss from the offense, whichever is greatest.
The charge of failing to file income tax returns with the IRS carries a maximum penalty of one year in prison and a fine of $100,000, or twice the gross gain or loss from the offense, whichever is greatest. The bank fraud count carries a maximum penalty of 30 years in prison and a fine of $1 million. As part of his guilty plea, Degan agreed to make restitution to the IRS in the full amount of the taxes that he owes, and he agreed to make restitution to the lender in the full amount of the PPP loan.
Sentencing is scheduled for Feb. 14, 2023. U.S. Attorney Philip R. Sellinger credited special agents of the IRS – Criminal Investigation, under the direction of Acting Special Agent in Charge Tammy Tomlins in Newark, with the investigation leading to today’s guilty plea.
The government is represented by Jason M. Richardson, Attorney in Charge of the U.S. Attorney’s Office in Camden.
Related Federal Cases
- Gomidas Garabed Hartounian, Wire Fraud and Tax Evasion, NJ 2024 · Pennsylvania
- Doreen A. Gentile, Tax Refund Fraud, NJ 2024 · Pennsylvania
- John Desantis, Securities and Wire Fraud, NY · New York
- Zaki M. Bey, Loan and Bank Fraud, PA 2024 · New Hampshire
- Michael Conway, Wire Fraud, New Jersey 2016 · New York
Key Facts
- State: New Jersey
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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