Norwood Man Sentenced 4 Years for Tax Evasion
A federal judge in Boston handed down a 48-month prison sentence to Charles Adams of Norwood, Massachusetts, for tax evasion, conspiring to defraud the United States, and obstructing the Internal Revenue Service (IRS), the Justice Department and IRS announced.
U.S. District Judge F. Dennis Saylor also ordered Adams to pay restitution in the amount of $401,000. This sentencing is the latest development in a case that has seen multiple defendants convicted of promoting and using tax fraud schemes.
On April 2, 2012, a federal jury convicted Adams, Catherine Floyd, and William Scott Dion for conspiracies to defraud the United States through the promotion and use of multiple tax fraud schemes. The jury convicted all three of conspiracy to defraud the IRS by promoting an “under the table” payroll scheme.
Dion and Floyd were also convicted for conspiracy to defraud the IRS through the use of an “underground warehouse banking” scheme designed to conceal customer income and assets from the IRS. Floyd and Dion were also convicted separately for corruptly endeavoring to obstruct the IRS’s ability to determine their own income. Adams was separately convicted of tax evasion with respect to his own taxes.
On Sept. 6, 2012, Judge Saylor sentenced Dion to 84 months in prison and ordered him to pay $3 million in restitution. On Sept. 21, 2012, Judge Saylor sentenced Floyd to 60 months in prison and ordered her to pay $3 million in restitution.
The evidence presented at trial revealed that Adams, Floyd, and Dion ran a payroll tax scheme to pay employees “under the table” without properly accounting for, withholding, and paying over to the IRS the payroll taxes required by law.
The scheme, operated under three different names – Contract America, Talent Management, and New Way Enterprises – attracted approximately 150 individuals who subscribed to the payroll scheme, resulting in over $2.5 million in unreported wages and compensation being paid through the system.
The defendants promoted the payroll scheme to employers and individuals who wanted to avoid payment of employer payroll taxes and individual payroll taxes. The evidence at trial also established that Floyd and Dion conspired to defraud the United States by promoting and operating an “underground warehouse banking” scheme that helped subscribers conceal income and assets from the IRS.
The warehouse banking scheme operated under three different names – Your Virtual Office, Office Services, and Calico Management – and involved maintaining accounts at several banks to deposit and commingle business receipts and other funds received from subscribers to mask the true ownership of the funds.
According to the evidence presented at trial, more than $28 million in deposits were made into the various bank accounts used in the scheme. In August 2009, the three defendants were indicted along with four other individuals for promoting and using these schemes.
On Dec. 9, 2011, prior to trial, Gail and Myron Thorick of West Warwick, R.I., pleaded guilty to conspiring to defraud the United States by helping operate the “warehouse banking” scheme, and for filing false tax returns. On that same date, Gary Alcock pleaded guilty to conspiracy by using the payroll scheme, as well as to tax evasion and willful failure to file tax returns.
On Jan. 24, 2012, Kenneth Scott Alcock pleaded guilty to conspiracy relating to the payroll scheme and to one count of tax evasion. All four defendants are awaiting sentencing.
Kathryn Keneally, Assistant Attorney General for the Justice Department’s Tax Division, and Carmen M. Ortiz, U.S. Attorney for the District of Massachusetts, commended the efforts of special agents of IRS – Criminal Investigation, who investigated the case, and Tax Division Assistant Chief John N. Kane, former Tax Division Attorney, for their work on the case.
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